11. 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: Talker Corp. and MobileTalk Inc. 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: Data Collected Talker Corp. EBIT $209,100 Depreciation $69,003 Total operating capital $918,000 Net investment in operating capital $459,000 WACC 11.85% MobileTalk Inc. $76,500 $25,245 $477,360 $198,900 11.88% 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 Talker Corp. is , whereas the NOPAT for MobileTalk Inc. is Talker Corp. has a free cash flow of , whereas, MobileTalk Inc. has a free cash flow of Talker Corp. has a return on invested capital than MobileTalk Inc. 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