Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Based on the Data Given, Please Complete all of the yellow blanks in Part A. a. Calculate free cash flow for each projected year. Also
Based on the Data Given, Please Complete all of the yellow blanks in Part A.
a. Calculate free cash flow for each projected year. Also calculate the growth rates of free cash flow each year to ensure that there is constant growth (i.e., the same as the constant growth rate in sales) by the end of the forecast period.
Based on these projections and actual 2016 data, you forecast parts of the income statement and balance sheets necessary to calculate free cash flow: Partial Income Statement for the Year Ending December 31 \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|} \hline & & \multirow{2}{*}{\begin{tabular}{r} Actual \\ 2016 \end{tabular}} & \multirow{2}{*}{\multicolumn{2}{|c|}{\begin{tabular}{r} Projected \\ 2017 \end{tabular}}} & \multirow{2}{*}{\multicolumn{2}{|c|}{\begin{tabular}{r} Projected \\ 2018 \end{tabular}}} & \multirow{2}{*}{\multicolumn{2}{|c|}{\begin{tabular}{r} Projected \\ 2019 \\ \end{tabular}}} & \multirow{2}{*}{\multicolumn{2}{|c|}{\begin{tabular}{r} Projected \\ 2020 \end{tabular}}} \\ \hline & & & & & & & & & & \\ \hline Net Sales & $ & 800.0 & $ & 920.0 & $ & 1,012.0 & $ & 1,072.7 & $ & 1,137.1 \\ \hline COGS (except depreciation) & $ & 576.0 & $ & 662.4 & $ & 728.6 & $ & 772.4 & $ & 818.7 \\ \hline Depreciation & $ & 60.0 & $ & 69.0 & $ & 75.9 & $ & 80.5 & $ & 85.3 \\ \hline Total operating costs & $ & 636.0 & $ & 731.4 & $ & 804.5 & $ & 852.8 & $ & 904.0 \\ \hline EBIT & $ & 164.0 & $ & 188.6 & $ & 207.5 & $ & 219.9 & $ & 233.1 \\ \hline \end{tabular} Partial Balance Sheets for December 31 Operating current assets Operating current liabilities Net operating working capital Net fixed assets Net operating capital NOPAT Investment in operating capital Free cash flow Growth in FCF Growth in sales na
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started