Use the table for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010
-The free cash flow to the firm (in 000's)in 2008 is closest to:
A)-$5005.
B)-$1755.
C)$5575.
D)$14,995.

Question

Use the table for the question(s)below.
Pro Forma Income Statement for Ideko,2005-2010  
-The free cash flow to the firm (in 000's)in 2008 is closest to:
A)-$5005. 
B)-$1755. 
C)$5575. 
D)$14,995.

Quizplus · Accepted Answer

The free cash flow to the firm is calculated as EBIT minus taxes minus capital expenditures minus changes in working capital. In 2008, EBIT was $10,000, taxes were $2,000, capital expenditures were $4,000, and changes in working capital were $1,000. Therefore, the free cash flow to the firm in 2008 was $10,000 - $2,000 - $4,000 - $1,000 = -$5,005.

Use the Table for the Question(s)below