On the basis of Free Cash Flow and weighted Average cost of capital
Use the following income statements and balance sheets to calculate garnets Inc free cash flow for 2008.
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Garnet Inc
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|
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2008
|
2007
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|
income statement
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|
|
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net sales
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$530
|
500
|
|
cost s
|
40
|
380
|
|
depreciation
|
30
|
25
|
|
total operating costs
|
430
|
405
|
|
earning before interest and taxes
|
100
|
95
|
|
less interest
|
23
|
21
|
|
earning before taxes
|
77
|
74
|
|
taxes(40%)
|
30.8
|
29.6
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net income
|
46.2
|
44.4
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balance sheet
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|
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assets
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|
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cash
|
28
|
27
|
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marketable securities
|
69
|
66
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accounts receivable
|
81
|
80
|
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inventories
|
112
|
106
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total current assets
|
293
|
279
|
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net plant and equipment
|
281
|
265
|
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total assets
|
574
|
544
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liabilities and equity
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|
|
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accounts payable
|
56
|
52
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notes payable
|
138
|
130
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accruals
|
28
|
28
|
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total current liabilities
|
222
|
210
|
|
long term bonds
|
173
|
164
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common stock
|
100
|
100
|
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retained earning
|
79
|
70
|
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common equity
|
179
|
170
|
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total liabilities and equity
|
574
|
544
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