TSW Inc.had the following data for last year: Net income = $800; Net operating profit after taxes (NOPAT) = $700; Total assets = $3,000; and Total operating capital = $2,000.Information for the just-completed year is as follows: Net income = $1,000; Net operating profit after taxes (NOPAT) = $925; Total assets = $2,600; and Total operating capital = $2,500.How much free cash flow did the firm generate during the just-completed year?
A) $383
B) $425
C) $468
D) $514
E) $566

Question

Quizplus · Accepted Answer

Free cash flow (FCF) is calculated as NOPAT minus the change in total operating capital. The change in total operating capital is $2,500 - $2,000 = $500. Therefore, FCF = $925 - $500 = $425.

TSW IncHad the Following Data for Last Year: Net Income =