Question
Last year, your company had revenue of $27.5 million, cost of goods sold (COGS) of $14.0 million, cost of sales, general and administrative (SG&A) of
Last year, your company had revenue of $27.5 million, cost of goods sold (COGS) of $14.0 million, cost of sales, general and administrative (SG&A) of $2.5 million, accounts receivable (AR) of $8.5 million, Accounts Payable (AP) of $7.0 million and Inventory of $5.5 million. What will free cash flow be this year if you increase revenue by 3.5% and AR by 14.5%, while keeping COGS growth at 3.0% and all else being equal? last year? Assume there are no taxes and no new capital expenditures.
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ANSWER To calculate the free cash flow for the current year we need to start with the formula for free cash flow Free Cash Flow Operating Cash Flow Ca...Get Instant Access to Expert-Tailored Solutions
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Managerial Economics and Business Strategy
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