Question

Find the Free Cash Flow in 2019 for Alaimo Enterprise Alaimo Enterprise Income Statement 31-Dec-19 31-Dec-18 Revenues 100 80 COGS 80 64 Depreciation 5 4 Operating income 15 12 Interest expense 2 2 Provision for taxes 2 2 Net Income 11 8 Balance Sheet 31-Dec-19 31-Dec-18 Cash 50 45 Receivables 16 12 Inventory 20 18 Current Assets 86 75 Gross PPE 130 110 Accumulated Depr. 55 50 Net PPE 75 60 Total Assets 161 135 ST Borrowings 10 10 Payables 20 20 Current Liabilities 30 30 LT Debt 40 40 Total Liabilities 70 70 Equity 91 65 Liabilities Equity 161 135

Answer 1

-18

Step-by-step explanation:

The computation of the free cash flow is given below:

As we know that

Free cash flow = cashflow from operations - capital expenditures

Here,

Cashflow from operations = operating income + depreciation- taxes -change in working capital

= 15 + 5 - 2 - 6

= 12

And,

Capital expenditures = ending net ppe + depreciation - beginning ppe

= 75 + 15 - 60

= 30

Now

Free cashflow = cashflow from operations - capital expenditure

= 12 - 30

= -18