The following are CBA Bhd.s year end statement of financial position and statement of profit and loss for 2018 and 2019:

2019 (RM) 2018 (RM)

Non Current Assets: Gross Non Current assets 317,503 232,179 Less accumulated depreciation 54,045 34,187 Net Non Current assets 263,458 197,992 Current Assets: Cash and equivalents 208,323 102,024 Accounts receivable 690,294 824,979 Inventories 942,374 715,414 Total Current Aassets 1,840,991 1,642,417 Total Assets 2,104,449 1,840,409 Non Current Liabilities Long term debt 410,769 372,931 Total Non Current Liabilities 410,769 372,931 Current Liabilites Short term borrowings 288,798 296,149 Accounts payable 636,318 414,611 Accruals 106,748 103,362 Total Current Liabilities 1,031,864 814,122 Total Liabilities 1,442,633 1,187,053 Shareholders Equity Common stock (100,000 shares) 550,000 550,000 Retained earnings 111,816 103,356

Sept. Dec. 2020 Final Take-home Examination BD 115 Introduction to Finance / DBF 102 Introduction to Financial Management

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Total Shareholders Equity 661,816 653,356 Total Liabilities and Shareholders Equity 2,104,449 1,840,409

2019 (RM) 2018 (RM) Sales 2,325,967 2,220,607 (-) Cost of goods sold 1,869,326 1,655,827 Other expenses 287,663 273,870 Total operating costs excluding depreciation and amortization 2,156,989 1,929,697 Depreciation and amortization 25,363 26,341 Total operating costs 2,182,352 1,956,038 EBIT 143,615 264,569 (-) Interest expense 31,422 13,802 EBT 112,193 250,767 (-) Taxes (30%) 33,658 75,230 Net income 78,535 175,537 Required: (i) Calculate the after tax operating income (i.e. after-tax EBIT) for 2018 and 2019. (5 marks) (ii) Calculate the net working capital (NWC) that is supported by non-free sources for 2018 and 2019, and the changes in NWC between these two years. (5 marks) (iii) What is free cash flow (FCF)? Calculate the FCF for 2019. In your opinion, is a negative FCF always a bad sign? Explain using an appropriate example.