Question

Vasudevan Inc. recently reported operating income of $2.30 million, depreciation of $1.20 million, and had a tax rate of 25%. The firm's expenditures on fixed assets and net operating working capital totaled $0.60 million. How much was its free cash flow, in millions?

Answer 1

Answer:

free cash flow is 2.352 million

Explanation:

Given data:

operating income is $2.30 million

depreciation $1.20

tax rate is 25%

free cash flow is calculated by using below formula

free cash flow = operating  income ( 1- Tax) + depreciation -  fixed working capital

                       = 2.75( 1 - 0.25) + 1.20 - 0.6

                       = 2.352 million

free cash flow is 2.352 million