Problem:
Use the financial statements for Widget Corp and find the FCF.
Balance Sheets Widget Corp. (In Millions of Dollars) (Winter 2013)
|
Assets
|
2013
|
2012
|
Liabilities and Equity
|
2013
|
2012
|
|
Cash
|
$100
|
$80
|
Accounts Payable
|
$50
|
$40
|
|
Short-term Investments
|
10
|
10
|
Notes Payable
|
$200
|
$180
|
|
Accounts Receivable
|
$400
|
$380
|
Accruals
|
$190
|
$150
|
|
Inventories
|
$450
|
$490
|
Total Current Liabilities
|
$440
|
$370
|
|
Total Current Assets
|
$960
|
$960
|
|
|
|
|
Net Plant and Equipment
|
$1065
|
$965
|
Long-term Debt
|
$400
|
$650
|
|
|
|
|
Total Debt
|
$840
|
$1,020
|
|
|
|
|
Common Stock (50 mill)
|
$485
|
$500
|
|
|
|
|
Retained Earnings
|
$700
|
$405
|
|
|
|
|
Total Common Equity
|
$1,185
|
$905
|
|
Total Assets
|
$2,025
|
$1,925
|
Total Liabilities and Equity
|
$2,025
|
$1925
|
Income Statements Widget Corp (In Millions of Dollars) (Winter 2013)
|
|
2013
|
2012
|
|
Total Revenue
|
$4000
|
$3500
|
|
Operating Expenses
|
$3000
|
$2900
|
|
EBITDA
|
$1000
|
$600
|
|
Depreciation
|
$200
|
$170
|
|
Amortization
|
$100
|
$90
|
|
Depreciation and Amortization
|
$300
|
$260
|
|
EBIT (Operating Income)
|
$700
|
$340
|
|
Less Interest
|
$125
|
$115
|
|
EBT
|
$575
|
$225
|
|
Less Taxes (40%)
|
$230
|
$90
|
|
Net Income before preferred dividends
|
$345
|
$135
|
|
Preferred Dividends
|
$20
|
$20
|
|
Net Income
|
$325
|
$115
|
|
Common Dividends
|
$160
|
$110
|
|
Additions to Retained Earnings
|
$165
|
$5
|
Additional Information:
The question is from Finance as well as it is about finding the FCF or Free Cash Flow from balance sheet and income statements given in the question. The computations have been given in the solution comprehensively.