The 2013 income statement for Betty's Barstools shows that depreciation expense is $100 million, EBIT is $400 million, and taxes are $120 million. At the end of the year, the balance of gross fixed assets was $510 million. The increase in net operating working capital during the year was $94 million. Betty's free cash flow for the year was $625 million. What was the beginning of year balance for gross fixed assets?

Question

Quizplus · Accepted Answer

Free cash flow (FCF) = EBIT - Taxes + Depreciation - CapEx - Increase in NWC

$625 million = $400 million - $120 million + $100 million - CapEx - $94 million

CapEx (capital expenditures) = $661 million

Ending gross fixed assets = Beginning gross fixed assets + CapEx - Depreciation

$510 million = Beginning gross fixed assets + $661 million - $100 million

Beginning gross fixed assets = $849 million

The 2013 Income Statement for Betty's Barstools Shows That Depreciation