Question

Fake Company Beta generated $111 million in cash from operations in its most recent fiscal year. It also spent $65 million on new equipment for its two assembly plants. If the company's net income was $12 million and it pays no dividends, what was its most recent fiscal year free cash flow?

Answer 1

Fake Company Beta's most recent fiscal year free cash flow is $46 million, calculated by subtracting capital expenditures of $65 million from the cash generated from operations, which is $111 million.

Step-by-step explanation:

The free cash flow for Fake Company Beta in its most recent fiscal year is calculated by taking the cash generated from operations and subtracting the capital expenditures. In this case, the company generated $111 million in cash from operations and spent $65 million on new equipment. So, the free cash flow is:

$111 million (cash from operations) - $65 million (capital expenditures) = $46 million free cash flow.

Note that net income and dividend payments are not directly used in the free cash flow calculation, although net income provides insight into the company's profitability.