Answer:
the free cash flow for the current year is zero.
Explanation:
Net income = $400; Net operating profit after taxes (NOPAT) = $500; Total assets = $2,000; and Total operating capital = $1700
Net income = $800; Net operating profit after taxes (NOPAT) = $700; Total assets = $2,300; and Total operating capital = $2,100.
current year:
operating profit after taxes 700
Capital expenditures: 2,000 - 2,300 = (300)
working capital expeneses 1,700 - 2,100 = (400)
free cash flow: 0
As assets increase the company use cash to increase his assets
Also, the operating capital increase the comapny pa debts, extend his collection cycle or any other desition which, increases his cahs needs.
Therefore the free cash flow for the year is zero.
