Bubba Ho-Tep Company reported net income of $300 million for the most recent fiscal year.The firm had depreciation expenses of $125 million and capital expenditures of $150 million.Although they had no interest expense,the firm did have an increase in net working capital of $20 million.What is Bubba Ho-Tep's free cash flow?
A)$170 million
B)$255 million
C)$150 million
D)$5 million

Question

Quizplus · Accepted Answer

Free Cash Flow (FCF) = Net Income + Depreciation Expense - Capital Expenditures - Increase in Net Working Capital
FCF = $300 million + $125 million - $150 million - $20 million
FCF = $255 million

Bubba Ho-Tep Company Reported Net Income of $300 Million for the Most