Finding operating and free cash flows Consider the balance sheets and selected data from the income statement of Keith Corporation that follow B a. Calculate the firm's net operating profit after taxes (NOPAT) for the year ended December 31, 2015. b. Calculate the firm's operating cash flow (OCF) for the year ended December 31, 2015. c. Calculate the firm's free cash flow (FCF) for the year ended December 31, 2015 d. Interpret, compare and contrast your cash flow estimate in parts (b) and (c) a. The net operating profit after taxes is $. (Round to the nearest dollar) 2 Enter your answer in the answer box and then click Check Answer 3 parts remaining Clear All Check Answer Keith Corporation Balance Sheets December 31 Assets 2015 2014 Cash $1,460 $990 Marketable securities 1,800 1,160 Accounts receivable 2,010 1,770 Inventories 2,860 2,770 Total current assets $8,130 $6,690 Gross fixed assets $29,450 $28,110 Less: Accumulated depreciation 14,750 13,080 Net fixed assets $14,700 $15,030 Total assets $22,830 $21,720 Liabilities and Stockholders' Equity Accounts payable $1,630 $1,450 Notes payable 2,790 2,150 Accruals 150 250 Total current liabilities $4,570 $3,850 Long-term debt $4,870 $5,060 Total liabilities $9,440 $8,910 Common stock $9,960 $9,960 Retained earnings 3,430 2,850 Total stockholders' equity $13,390 $12,810 Print Done Data Table $29,450 14,750 $14,700 $22,830 $28,110 13,080 $15,030 $21,720 Gross fixed assets Less: Accumulated depreciation Net fixed assets Total assets Liabilities and Stockholders' Equity Accounts payable Notes payable Accruals Total current liabilities Long-term debt Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $1,630 2,790 150 $4,570 $4,870 $9,440 $9,960 3,430 $13,390 $22,830 $1,450 2,150 250 $3,850 $5,060 $8,910 $9,960 2,850 $12,810 $21,720 Income Statement Data (2015) Depreciation expense Earnings before interest and taxes (EBIT) Interest expense Net profits after taxes Tax rate $1,670 2,700 367 1,400 40% d. Interpret, compare and contrast your cash flow estimate in parts (b) and (c). (Select all that apply) A. Keith Corporation has positive cash flows from operating activities. OB. The FCF value is very meaningful because it shows that the cash flows from operations are adequate to cover both operating expense plus investment in fixed and current assets. c. Depreciation is approximately the same size as net operating profit after tax, so the operating cash flow is about twice the NOPAT D. The OCF value is very meaningful because it shows that the cash flows from operations are adequate to cover both operating expense plus investment in fixed and current assets. O E. Keith Corporation has negative cash flows from operating activities
