Question

Tater and Pepper Corp. reported free cash flows for 2018 of $51.1 million and investment in operating capital of $34.1 million. Tater and Pepper incurred $14.8 million in depreciation expense and paid $25.3 million in taxes on EBIT in 2018. Calculate Tater and Pepper’s 2018 EBIT.

Answer 1

Earnings before interest and tax is $95.7 million

Step-by-step explanation:

Earnings before interest and tax is the short form for earnings before interest and tax, which is net income of the company before considering paying interest obligation to bondholders and taxes payable to the relevant tax authorities whether state,federal or local authorities

Earning's Before Interest and Taxes

Operating cash flow = FCF + investment in Capital expenditure

$51.1 million+$34.1million = 85.2 million

OCF= EBIT - Taxes + Depreciation

85.2 million = EBIT -25.3 million +14.8 million = ?

EBIT = 95.7 million

Answer 2

Tater and Pepper Corp

computation of EBIT

$million

Free cash flow 51.1

Add: Tax 25.3

Investment in operating Capital 34.1 59.4

110.5

less: Depreciation expenses 14.8

EBIT 95.7

Step-by-step explanation: