Question

Brooks Sisters' operating income (EBIT) is $168 million. The company's tax rate is 40.0%, and its operating cash flow is $142.1 million. The company's interest expense is $17 million. What is the company's net cash flow? (Assume that depreciation is the only non-cash item in the firm's financial statements.) (Answers are in $ millions.)

Answer 1

The company's net cash flow is $64.7 million

Step-by-step explanation:

Brooks Sisters' operating income (EBIT) is $168 million and the company's interest expense is $17 million.

Taxable income = $168 - $17 = $151 million

The company's tax rate is 40.0%, and its operating cash flow is $142.1 million:

Tax = $151 x 40% = $60.4 million

The company's net cash flow = Operating cash flow - The company's tax - the company's interest expense = $142.1 - $60.4 - $17 = $64.7 million