Lee & Long, a clothing manufacturer, is considering filing for bankruptcy. The firm has EBIT of $1.4
Question:
a. Calculate Lee & Long’s current cash flow.
b. Assume that Lee & Long’s management can convince its creditors to convert 25% of its debt into equity by exchanging their bonds for newly issued stock at book value. Calculate Lee & Long’s cash flow after the debt restructure.
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M a EBIT 140 Interest 40 x 085 340 EBT 200 Tax 000 EAT 200 Add Deprec 05 x 60 300 Deb...View the full answer
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