Given the balance sheets and selected data from the income statement of SMG Industries that follow, answer parts (a)–(c).

a. Calculate the firm’s operating cash flow (OCF) for the year ended December 31, 2012, using Equation 2.2.

b. Calculate the firm’s free cash flow (FCF) for the year ended December 31, 2012, using Equation 2.4.

c. Interpret, compare, and contrast your cash flow estimates in parts (a) and (b).

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SMG Industries Balance Sheet (in S millions) December December Liabilities and Stock- December December 31,2012 31,2011 Assets 31,2012 31,2011 holders' Equity Cash Marketable secuities 3,800 3,200 Notes payable $3,500 S 3,000 Accounts payable $ 3,600 S 3,500 4.800 4,200 1.300 4,900 4800 Total current liabilities 9,600 9,000 6.000 6,000 $15.600 $15,000 Accounts receivable4.000 3.800 Accruals 1,200 Inventories Total current assets Gross fixed assets Less: Accumulated $16,200 $31,500 $14.800 Long-term debt $30,100 Total liabilities depreciation 14,700 13,100 Common stock Net fixed assets $16,800 $17.000 Retained earnings Total assets $11,000 $11,000 6,4005,800 S33,000 S380 Total stockholders' equity $17.400 16,800 Total liabilities and stockholders' equity S33,000 S3L800 Income Statement Data (2012, in Smillions) S1,600 4,500 1.300 2,400 Depreciation expense Earmings before interest and taxes (EBIT axes Net profits after taxes