Question
In 2018, Firm A had reported taxes of $500 million and a decrease in deferred taxes by $40 million. EBITA was $2.5 billion and net
In 2018, Firm A had reported taxes of $500 million and a decrease in deferred taxes by $40 million. EBITA was $2.5 billion and net working capital was the same fraction of sales as in 2017, 25%. In 2018, interest tax shields were $55 million and taxes on nonoperating income (interest income) were $20 million. Depreciation was $300 million in 2018. Sales were $20 billion in 2018 and $18 billion in 2017. Net PPE was 14% of sales in 2018 and 2017. There was no operating lease interest and no increase in net other assets in 2018. Calculate Firm A's free cash flow (as appropriate in the WACC approach) in 2018. Show your calculations. Write down exactly which formula or expression you use and which numbers corresponds to each term.
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