Evaluating free cash flows and return on invested capital

You are an industry analyst for the telecom sector. You are analyzing financial reports from two companies: Cellt Corp. and Talk$2$Me Inc.

Corporate tax for both firms is $35\%.$ Your associate analyst has calculated and compiled, in the following table, a list of important figures you

need for the analysis:

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 CellT Corp. is

$,$ whereas the NOPAT for Talk$2$Me Inc. is

Cellt Corp. has a free cash flow of

$,$ whereas, Talk$2$Me Inc. has a free cash flow of

Cellt Corp. has a

return on invested capital than Talk$2$Me 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.