Finding operating and free cash flows Consider the balance sheets and selected data from the income statement of Keith Corporation that follows

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).

Keith Corporation Balance Sheets December 31 2015 2014 Assets Cash Marketable securities Accounts receivable Inventories $1,470 1,760 2,020 2,930 $8,180 $29,540 14,710 $14,830 $23,010 $970 1,160 1,850 2,840 $6,820 $28,050 13,060 $14,990 $21,810 Total current assets Gross fixed assets Less: Accumulated depreciation Net fixed assets Total assets Liabilities and Stockholders' Equity Accounts payable Notes payable Accruals $1,550 2,760 160 $4,470 $5,090 $9,560 $10,020 3,430 $13,450 $23,010 $1,460 2,190 310 $3,960 $4,990 $8,950 $10,020 2,840 $12,860 $21,810 Total current liabilities Long-term debt Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Income Statement Data (2015) Depreciation expense Earnings before interest and taxes (EBIT) Interest expense Net profits after taxes Tax rate $1,650 2,690 365 1,395 40% Keith Corporation Balance Sheets December 31 2015 2014 Assets Cash Marketable securities Accounts receivable Inventories $1,470 1,760 2,020 2,930 $8,180 $29,540 14,710 $14,830 $23,010 $970 1,160 1,850 2,840 $6,820 $28,050 13,060 $14,990 $21,810 Total current assets Gross fixed assets Less: Accumulated depreciation Net fixed assets Total assets Liabilities and Stockholders' Equity Accounts payable Notes payable Accruals $1,550 2,760 160 $4,470 $5,090 $9,560 $10,020 3,430 $13,450 $23,010 $1,460 2,190 310 $3,960 $4,990 $8,950 $10,020 2,840 $12,860 $21,810 Total current liabilities Long-term debt Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Income Statement Data (2015) Depreciation expense Earnings before interest and taxes (EBIT) Interest expense Net profits after taxes Tax rate $1,650 2,690 365 1,395 40%