Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

8. Free cash flow Accounting statements represent a company's earnings, but this is not the real cash that a company generates. Earnings data can be

image text in transcribed
image text in transcribed
8. Free cash flow Accounting statements represent a company's earnings, but this is not the real cash that a company generates. Earnings data can be manipulated and can be deceiving. Thus, corporate decision makers and security analysts focus on the free cash flow that a firm generates to analyze the company's real cash pribor Which of the following statements best describes fret cash flow? The cash flow available for distribution to all investors after the company has made all investments in fixed assets and working capital necessary to sustain a firm's ongoing operations The exceu cach generated by revenues less all operating expenses. Suppose you are the only owner of a chain of coffee shops near Universities Your current cates are doing well, but you are enterested in starting a forie ding restaurant. You decide to use the cath generated from your enting business to enter into a new business. Your accountant prondes you with the following data on your current financial performance: Financial update as of June 15 You can be generates $111.000 EBIT . The corporate trattapable to your busines35% The depreciation rooted in the financial statemente 21.145. You don't need to spend money for new equipment in your existing cover you do 516,650 of doch You need to purchase 58.880 inch tables and point, and more formal leware-ant that you calling and wages bevable, wit rode 55 550 Last year, JBH Corp. reported a book value of $350 million in current assets, of which 40% is cash, 42% 15 short-term investments, and the rest is accounts receivable and inventory. The company reported $297.5 million of current liabilities including accounts payable and accruals Interestingly, the company had no notes payable claims last year. There were no changes in the accounts payables during the reporting period. The company, however, invested heavily in plant and equipment to support its operations. It reported'a book value of $560 million in long-term assets last year. Income Statement For the Year Ended on December 31 (Millions of dollars) J&H Corp. Industry Average 53.700 $4,625 Net sales 2.960 3.700 Operating costs, except depreciation and amortization 155 Deprecation and amortization 3.100 3.305 Tots operating costs 1592 5240 111 Operating income (or EBIT) Lettere Earnings before tres 3533 1620 1320 etcome 8. Free cash flow Accounting statements represent a company's earnings, but this is not the real cash that a company generates. Earnings data can be manipulated and can be deceiving. Thus, corporate decision makers and security analysts focus on the free cash flow that a firm generates to analyze the company's real cash pribor Which of the following statements best describes fret cash flow? The cash flow available for distribution to all investors after the company has made all investments in fixed assets and working capital necessary to sustain a firm's ongoing operations The exceu cach generated by revenues less all operating expenses. Suppose you are the only owner of a chain of coffee shops near Universities Your current cates are doing well, but you are enterested in starting a forie ding restaurant. You decide to use the cath generated from your enting business to enter into a new business. Your accountant prondes you with the following data on your current financial performance: Financial update as of June 15 You can be generates $111.000 EBIT . The corporate trattapable to your busines35% The depreciation rooted in the financial statemente 21.145. You don't need to spend money for new equipment in your existing cover you do 516,650 of doch You need to purchase 58.880 inch tables and point, and more formal leware-ant that you calling and wages bevable, wit rode 55 550 Last year, JBH Corp. reported a book value of $350 million in current assets, of which 40% is cash, 42% 15 short-term investments, and the rest is accounts receivable and inventory. The company reported $297.5 million of current liabilities including accounts payable and accruals Interestingly, the company had no notes payable claims last year. There were no changes in the accounts payables during the reporting period. The company, however, invested heavily in plant and equipment to support its operations. It reported'a book value of $560 million in long-term assets last year. Income Statement For the Year Ended on December 31 (Millions of dollars) J&H Corp. Industry Average 53.700 $4,625 Net sales 2.960 3.700 Operating costs, except depreciation and amortization 155 Deprecation and amortization 3.100 3.305 Tots operating costs 1592 5240 111 Operating income (or EBIT) Lettere Earnings before tres 3533 1620 1320 etcome

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Personal Finance

Authors: Jeff Madura

5th edition

132994348, 978-0132994347

More Books

Students also viewed these Finance questions

Question

Describe the ethics of marketing.

Answered: 1 week ago

Question

ASCII stand for?

Answered: 1 week ago