Free Cash Flow Martha's Moving Van 4U, Inc. had free cash flow during 2008 of $1 million, EBIT of $30 million, tax expense of $8 million, and depreciation of $4 million. Using this information, what was Martha's Accounts Payable ending balance in 2008?

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The free cash flow is calculated as EBIT minus taxes, plus depreciation, minus changes in working capital. Given the free cash flow of $1 million, EBIT of $30 million, tax expense of $8 million, and depreciation of $4 million, the change in working capital (which includes accounts payable) must be $25 million. If we assume no other changes in working capital, the ending balance of accounts payable would be $35 million.