Reference no: EM13477243

Consider the following balance sheets and selected data from the income statement of Keith Corporation, then prepare answers for the accompanying questions:

Keith Corporation Balance Sheets

Assets	12/31/2009	12/31/2008
Cash	$   1,500	$   1,000
Marketable securities	1,800	1,200
Accounts receivable	2,000	1,899
Inventories	2,900	2,800
Total current assets	$   8,200	$   6,800
Gross fixed assets	$ 29,500	$ 28,100
Less: Accumulated depreciation	14,700	13,100
Net fixed assets	$ 14,800	$ 15,100
Total assets	$ 23,000	$ 21,800

            Liabilities and Stockholder's Equity

Accounts payable	$   1,600	$   1,500
Notes payable	2,800	2,200
Accruals	200	300
Total current liabilities	$   4,600	$   4,000
Long-term debt	5,000	5,000
Total liabilities	$   9,600	$   9,000
Common stock	$ 10,000	$ 10,000
Retained earnings	3,400	2,800
Total stockholder's equity	$ 13,400	$ 12,800
Total liabilities and owners equity	$ 23,000	$ 21,800

Keith Corporation Income Statement Data (2109)

Depreciation expense	$ 1,600
Earnings before interest and taxes	2,700
Interest expense	367
Net profits after taxes	1,400
Tax rate	40%

a. Calculate the firm's accounting cash flow from operations for the year ended December 31, 2009, using: Cash flow from operations = net profits after tax + depreciation

b. Calculate the firm's net operating profit after taxes (NOPAT) for the year ended December 31, 2009, using Equation:  NOPAT = EBIT x (1 - T)

c. Calculate the firm's operating cash flow (OCF) for the year ended December 31, 2009, using Equation:  OCF = NOPAT + Depreciation

d. Calculate the firm's free cash flow (FCF) for the year ended December 31, 2009, using the Equation in P1, above.

e. Interpret, compare, and contrast your cash flow estimates in parts a, c, and d.