Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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.

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

International Accounting

Authors: Shirine Rathore

2nd Edition

8120336739, 9788120336735

More Books

Students also viewed these Accounting questions

Question

Why are the Chinese such heavy users of the Internet?

Answered: 1 week ago