Finacial Management

QUESTION 1:
Keiths Corporation

a. interchange attend from Operations

currency flow from Operations = Net Profits after Taxes + derogation + Accruals
= 1400 + 1600 + two hundred
= 3200


b.Net Operating Profits after Taxes (NOPAT)

NOPAT = EBIT × (1 T)
= 2,700 × (1 - .4)
= 2,700 × 0.6
= 1,620


c.Operating Cash guide (OCF)

OCF = NOPAT + Depreciation
= 1,620 + 1,600
= 3,220


d.Free Cash give (FCF)

FCF = OCF Net laid Asset Investments (NFAI) Net underway Asset Investment (NCAI)



Therefore,

NFAI = metamorphose in Fixed Assets + Depreciation
= (15,000 14,800) + 1,600
= 200 + 1,600
= 1,800


NCAI = Change in Current Assets Change in (accounts payable + accruals)
= (8,200 6,800) (100 + 100)
= 1,400 200
= 1,200



FCF = OCF (NFAI) (NCAI)
= 1,620 1,800 1,200
= -1,380














e.Interpret, compare and contrast your change flow predicts in parts a, c and d.





Cash Flow estimation in Part A:
It is said, adding depreciation cover version to the firms net profit after taxes provides an estimate of the firms cash flow from operation. Cash Flow from Operation represents that the net profit after taxes is added to the depreciation and early(a) non-cash charges. The firm net profit after taxes of $1,400, depreciation of $1,600 and accruals of $200 are all sum to provide a summarise of $3200 which represent the corporation cash flow from operation in during 2009.


Cash Flow estimation in Part C:
A firms Operating Cash Flow OCF is the cash flow it generates from its normal operations (producing and selling its yield of goods and services). However, the firms Net Operating Profits after Taxes (NOPAT) of $1,620 is added to the firms depreciation of $1,600 which gives a total of $3,220. Therefore, Keiths Corporation generated $3,220 of cash flow from producing and...If you want to get a full essay, order it on our website: Orderessay



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