Corporate Finance Math Problem Example | Topics and Well Written Essays - 2000 words

Corporate Finance - Math Problem Example Liabilities on the other side also increased due to the expansion, while the equity deteriorated little bit in the year 2007 by 0.106 million because of the net loss of the company. Ans-2): Cash flow statement shows that the account receivable head of the company was increased with a rapid pace in the year 2007, which showed that the company was involved in credit sales. Cash flow statement also showed that the company spent $0.711 million to acquire the fixed assets during expansion of their network. The cash flow available to be distributed among the shareholders after the company has made all the investment in working capital and fixed assets to enhance the ongoing operation is called free cash flow (FCF). Ans-4): The assets which are used in the operation of the business like inventory, long term operation assets and plant & Equipment are known as operating current assets. By contrast, the fund which comes from the suppliers and reported as account payable, accrued wages and accrued taxes are referred to as operating current liabilities. Since both the ... o be distributed among the shareholders after the company has made all the investment in working capital and fixed assets to enhance the ongoing operation is called free cash flow (FCF). USES OF FCF: It is used to: Pay interest to debt holders. Pay dividends to shareholders. Repurchase stocks from the shareholders. Repay debt holders, which had been paid partially before. Buy marketable securities or other non-operating assets. Ans-4): The assets which are used in the operation of the business like inventory, long term operation assets and plant & Equipment are known as operating current assets. By contrast, the fund which comes from the suppliers and reported as account payable, accrued wages and accrued taxes are referred to as operating current liabilities. Net Operating Working Capital 2007 $ Operating Current Assets (Cash+Account Receivable inventories) 1926802 Operating Current Liability (Account Payables + Accruals) 608960 Net Operating Working Capital (Operating Current Assets - Operating Current Liabilities) 1317842 Net Operating Working Capital 2006 $ Operating Current Assets (Cash+Account Receivable+ inventories) 1075400 Operating Current Liability (Account Payables + Accruals) 281600 Net Operating Working Capital (Operating Current Assets - Operating Current Liabilities) 793800 Total Net Operating Capital 2007 $ Net Operating Working Capital (NOWC) 1317842 Operating Long Term Assets (OLTA) 939790 Total Net Operating Capital (NOWC - OLTA) 2257632 Total Net Operating Capital 2006 $ Net Operating Working Capital 793800 Operating Long Term Assets 344800 Total Net Operating Capital 1138600 Ans-5) Net Operating Profit After Tax (NOPAT) $ 2007 2006 Earning Before Interest and Taxes (EBIT) (158560) 146600 Tax Rate = 40% 0.4 0.4 NOPAT