Question 5

Bailey Corporations financial statements are provided here.

Balance Sheets as of December 31
Assets	2012		2011
Cash and equivalents	10,000		13,500
Accounts Receivable	20,000		22,500
Inventories	15,000		10,800
Current Assets	45,000		46,800
Net Plant and Equipment	55,000		43,200
Total Assets	100,000		90,000
Liabilities and Equity	2012		2011
Accounts Payable	5,000		5,400
Notes Payable	7,000		2,700
Accruals	3,000		6,300
Current Liabilities	15,000		14,400
Long-Term Bonds	26,000		21,600
Total Liabilities	41,000		36,000
Common Stock (5,000 shares)	5,000		5,000
Retained Earnings	54,000		49,000
Total Common Equity	59,000		54,000
Total Liabilities & Equity	100,000		90,000
Income Statement	2012
Net Sales	35,000.0
Operating Costs excluding depreciation and amortization	3,500.0
Earnings before interest, taxes, depreciation and amortization (EBITDA)	31,500.0
Depreciation and Amortization	1,750.0
Earnings before interest and taxes (EBIT)	29,750.0
Interest	2,625.0
Earnings before taxes (EBT)	27,125.0
Taxes 40%	10,850.0
Net Income	16,275.0

What was Baileys 2012 free cash flow?

Question 5 options:

	$2,400
	$4,150
	$8,450
	$5,900