Question

Fill in the blanks on this financial statement.

Net Income ($82)
Charges in Working Capital $100
FCFO $18
Disposal of PPE $150
Purchase of PPE ($27)
FCFI $123
Issuance of Stock $540
Dividend Payment ($110)
Issuance of Debt $68
Debt Repayment ($25)
Interest Expense ($75)
FCFF [?]
Total FCF [?] ​

Answer 1

Using the information given in the financial statement, we can calculate the missing values as follows:

First, we need to calculate the Free Cash Flow to Firm (FCFF), which represents the cash flow available to all investors (both equity and debt) after accounting for all expenses and investments:

FCFF = Net Income + Non-Cash Charges - Changes in Working Capital - Capital Expenditures

FCFF = (-82) + 0 - 100 - (-27)

FCFF = -55

Therefore, the FCFF is -$55.

Next, we can calculate the Total Free Cash Flow (FCF), which represents the cash flow available to equity investors after accounting for all expenses and investments, but before considering the effects of debt:

FCF = FCFF + Interest Expense - (1 - Tax Rate) x Debt Repayment

Assuming a tax rate of 30%, we can substitute the values:

FCF = (-55) + (-75) - (1 - 0.3) x (-25)

FCF = (-55) - (-7.5)

FCF = -47.5

Therefore, the Total FCF is -$47.5.

Note that FCFO (Free Cash Flow to Equity) is not given explicitly in the financial statement, but we can calculate it by subtracting the net cash used in financing activities from the FCF:

FCFO = FCF - Net Cash Used in Financing Activities

FCFO = (-47.5) - [(-110) + 540 + 68]

FCFO = (-47.5) + 498

FCFO = $450.5

Therefore, the FCFO is $450.5.