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What increase in net working capital

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Margetis Inc. wants to increase its free cash flow by $270 million during the coming year, which should result in a higher EVA and stock price. The CFO has made these projections for the upcoming year:

  • EBIT is projected to equal $1,275 million.
  • Gross capital expenditures are expected to total to $540 million versus depreciation of $180 million, so its net capital expenditures should total $360 million.
  • The tax rate is 40%.
  • There will be no changes in cash or marketable securities, nor will there be any changes in notes payable or accruals.

Problem 1: What increase in net working capital (in millions of dollars) would enable the firm to meet its target increase in FCF?

Reference no: EM132729743

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