10. Evaluating free cash flows and return on invested capital You're an industry analyst for the telecomm sector, and have been analyzing financial reports from two companies: TT&T Inc. and Phonez Corp. The corporate tax rate for both firms is 35%. Your associate analyst has calculated and compiled, in the following table, a list of important figures you'll probably need for the analysis: Phonez Corp. $124,600 Data Collected TT&T Inc. EBIT $175,000 Depreciation $70,000 Total operating capital $1,029,000 Net investment in operating capital $490,000 WACC 8.84% $49,840 $802,900 $259,000 11.50% In your analysis, you want to look for several characteristics-one of them being the return on invested capital (ROIC). Using the information available, complete the following statements: The net operating profit after tax (NOPAT) for TT&T Inc. is , whereas the NOPAT for Phonez Corp. is TT&T Inc. has a free cash flow of , whereas, Phonez Corp. has a free cash flow of TT&T Inc. has a return on invested capital than Phonez Corp. has. Your inference from the analysis is that both firms are in a high-growth phase, and their growth will be profitable. Considering your analysis, which of the following statements is true? If a company has positive NOPAT but a negative free cash flow, then the firm could be in a high-growth phase and making investments in operating capital to support growth. If a company has negative NOPAT but a positive free cash flow, then the firm could be in a high-growth phase and making investments in operating capital to support growth