Question
Extracts from the financial statements of Phoenix Supply Corporation (in millions) are as follows: 2014 2013 2012 Net income $2,410 $2,650 Interest expense 250 275
Extracts from the financial statements of Phoenix Supply Corporation (in millions) are as follows:
2014 | 2013 | 2012 | |
Net income | $2,410 | $2,650 | |
Interest expense | 250 | 275 | |
Tax expense | 810 | 880 | |
Net cash provided by operating activities | 2,500 | 2,750 | |
Total cash inflow for investing activities | 750 | 450 | |
Total cash outflow for investing activities | 1,100 | 650 | |
Total cash inflow for financing activities | 600 | 660 | |
Total cash outflow for financing activities | 800 | 870 | |
Accounts payable (yearend balances) | 2,200 | 2,110 | $2,150 |
Interest payable (yearend balances) | 75 | 79 | 79 |
Tax payable (yearend balances) | 52 | 55 | 52 |
Cash outflow and inflow for investing activities occurred for the sale and the purchase of equipment. Cash outflow for financing activities includes retirement of common stock of $200 million for 2014 and $220 million for 2013 and the retirement of longterm debt of $400 million for 2014 and $450 million for 2013. All cash inflows for financing activities are from the issuance of additional stock.
From 2013 to 2014, assuming a tax rate of 30%, Phoenix Supply's free cash flow to the firm decreased by:
Group of answer choices
a. $621.
b. $250.
c. $415.
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