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elena-s [515]
3 years ago
5

Free Cash Flow Iron Ore Corp. reported free cash flows for 2008 of $106 million and investment in operating capital of $189 mill

ion. Iron Ore listed $39 million in depreciation expense and $51 million in taxes on its 2008 income statement. What was Iron Ore's 2008 EBIT
Business
1 answer:
Ilia_Sergeevich [38]3 years ago
8 0

Answer:

$307 million

Explanation:

Iron ore Corporation reported a free cash flow of $106 million

The investment in operating capital is $189 million

Iron ore listed a depreciation expense of $39 million and a tax of $51 million on its income statement for 2008.

The first step is to calculate the operating cash flow

Free cash flow= Operating cash flow-Investment in operating capital

$106m= OCF-$189m

OCF= $106m+$189m

OCF= $295m

Operating cash flow= $295 million

Therefore, the EBIT can be calculated as follows

Operating cash flow= EBIT-Taxes+Depreciation

$295m= EBIT-$51m+$39m

$295m= EBIT-$12m

EBIT= $295m+$12m

EBIT= $307 million

Hence the iron ore's 2008 EBIT is $307 million.

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