Question
Net Income 104,000 + Depreciation +4,000 - Capital Expenditures -14,000 - Increases in Working Capital -8,000 = Free Cash Flow 86,000 Monroe Electronics' projected net
Net Income 104,000
+ Depreciation +4,000
- Capital Expenditures -14,000
- Increases in Working Capital -8,000
= Free Cash Flow 86,000
Monroe Electronics' projected net income and free cash flows are given above in thousands of dollars. Monroe expects their net income and increases in net working capital to increase by 6% per year. If Monroe were able to reduce its annual increase in working capital by 15% without affecting any other part of the business adversely, what would be the effect of this reduction on Monroe's value, given a cost of capital of 11%?
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Financial Statement Analysis
Authors: Martin S. Fridson, Fernando Alvarez
5th Edition
1119457149, 978-1119457145
