Question 6 (14 marks)

Given the balance sheets and selected data from the income statement of SMG Industries that follow, answer part (6.1) (6.4).

6.1. Calculate the companys net operating profit after taxes (NOPAT) for the year ended 31 December 2019. (3 marks)

6.2. Calculate the companys operating cash flow (OCF) for the year ended 31 December 2019. (3 marks)

6.3. Calculate the firms free cash flow (FCF) for the year ended 31 December 2019. (3 marks)

6.4. Interpret, compare and contrast your cash flow estimates in parts (6.2) and (6.3). (5 Marks)

NB: show all workings

SMG Industries statement of financial position (R in millions) 2018 Assets Cash Marketable securities Accounts receivable Inventories Total current assets Gross fixed assets Less: Accumulated depreciation Net fixed assets Total assets 31-Dec 2019 R3 500 3 800 4 000 4 900 16 200 31 500 14 700 16 800 33 000 R 3 000 3 200 3 800 4 800 14 800 30 100 13 100 17 000 31 800 Liabilities and stockholders' equity Account payable Notes payable Accruals Total current liabilities Long-term debt Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity R3 600 4 800 1 200 9 600 6 000 11 000 6 400 17 400 33 000 R 3 500 4 200 1 300 9 000 6 000 11 000 5 800 16 800 31 800 Statement of comprehensive income data (2019, R in millions) Depreciation Earnings before interest and taxes (EBIT) Taxes Net profits after taxes R 1 600 4 500 1 300 2 400