An analyst gathers the following information (in £ thousands) about a company:
FCFF 2,500
FCFE 1,300
Interest paid 260
If interest paid is classified as a cash flow from operating activities and the income tax rate is 40%, net debt repayment (in £ thousands) is closest to:
A. 940.
B. 1,044.
C. 1,200.
Hera la B obviamente. Error garrafal mío
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Based on your answer
Incorrect because it subtracts out the entire interest portion as opposed to the net-of-tax interest amount: FCFF – Interest paid = FCFE + Net debt repayment. Therefore, 2,500 – 260 = 1,300 + Net debt repayment; or Net debt repayment = 940.
In a common-size analysis of the cash flow statement, each line item of cash inflow may be stated as a percentage of:
A. total assets.
B. net revenue.
C. net cash flow
Correct Answer:
B. net revenue.
Mejor me callo…
An analyst gathers the following information (in € millions) about a company:
Net cash flow from operating activities (750)
Total cash inflows 1,500
Total cash outflows 2,500
Net increase (decrease) in cash (1,000)
On a common-size statement of cash flows presented using the indirect method, net operating cash flow is:
A. 30%.
B. 50%.
C. 75%.
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Based on your answer
Incorrect because when a cash flow statement has been presented using the indirect method, operating cash inflows and outflows are not separately presented; therefore, the common-size cash flow statement shows only the net operating cash flow (net cash provided by or used in operating activities) as a percentage of total inflows or outflows, depending on whether the net amount was a cash inflow or outflow. Because the net amount is an outflow, it should be calculated as a percentage of total cash outflows as follows: 750/2500 = 30%. The incorrect answer is obtained by dividing net cash used in operations by the net decrease in cash: 750/1000 = 75%.
A firm reported the following financial statement items:
€ millions
Net income 2,100
Non-cash charges 400
Interest expense 300
Capital expenditures 210
Working capital expenditures 0
Net borrowing 1,600
Tax rate 40%
The free cash flow to the firm (FCFF) is closest to:
Incorrect answer:
A. €2,110.
B. €2,470.
C. €2,590.
Puse la A. en vez de sumar los intereses se los resté. CENTRATE DAVID tu puedes, confío en ti
