Question
You are now trying to assess the free cashflow to the firm for Environ Systems in the most recent year. The income statement is reported
You are now trying to assess the free cashflow to the firm for Environ Systems in the most recent year. The income statement is reported below:
Revenues $1,000
- Cost of goods sold $ 550
- Depreciation $ 150
Operating Profit (EBIT) $ 300
- Interest expenses $ 100
Taxable Income $ 200
- Taxes $ 60
Net Income $ 140
You are also provided with the following information:
The firm reported capital expenditures of $ 100 million in the most recent year
The working capital, inclusive of cash, increased from $ 80 million at the beginning of the year to $105 million at the end of the year; the firms cash balance decreased by $ 15 million during the year and it has no short term debt.
The book value of equity was $ 900 million at the beginning of the year and the book value of debt was $800 million, and a cash balance of 20 million.
Assuming that the firm maintains its return on capital (ROIC) and reinvestment rate from the most recent year for the next 5 years, estimate the expected growth rate
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