Respuesta :
Nintendo's EBIT is $350, its tax rate is 21%, depreciation is $50, capital expenditures are $70, and the planned decrease in NWC is $40. The firm's Free cash flow is $365.
Free cash flow = EBIT(1-Tax Rate) + Depreciation & Amortization - Change
in Net Working Capital - Capital Expenditure
Free Cash Flow = $350(1 - 0.21) + $50 - $70 - $40
Free Cash Flow = $365
- Free cash flow (FCF) is the money a business makes after subtracting the cash it must spend to run its business and maintain its capital assets. Or to put it another way, free cash flow is the money that remains after a business pays its operating expenses (OpEx) and capital expenditures.
- A company may do whatever it wants with FCF, which is the money that is left over after paying for expenses like payroll, rent, and taxes. A company's cash management will be aided by knowing how to compute and analyze free cash flow. Investors can improve their investment choices by using the FCF calculation to gain insight into a company's financials.
Learn more about Free cash flow (FCF), here
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