Giglio Inc. has the following information for the previous year: Net income = $400; Net operating profit after taxes (NOPAT) = $500; Total assets = $2,000; and Total operating capital = $1700. The information for the current year is: Net income = $800; Net operating profit after taxes (NOPAT) = $700; Total assets = $2,300; and Total operating capital = $2100. What is the free cash flow for the current year?
A) $300
B) $400
C) $500
D) $600
E) $700

Question

Quizplus · Accepted Answer

Free cash flow = NOPAT + Depreciation and amortization - Change in operating capital= 700 + (2300 - 2000) - (2100 - 1700)= 700 + 300 - 400= $600