Part 1Cellular Access, Inc. is a cellular telephone service provider that reported net income of $256256 million for the most recent fiscal year. The firm had depreciation expenses of $114114 million, capital expenditures of $212212 million, and no interest expenses. Working capital increased by $1313 million. Calculate the free cash flow for Cellular Access for the most recent fiscal year. Part 1The free cash flow for Cellular Access for the most recent fiscal year is $[input]enter your response here million. (Round to the nearest integer.)

Question

Part 1Cellular Access​, Inc. is a cellular telephone service provider that reported net income of ​$256256 million for the most recent fiscal year. The firm had depreciation expenses of ​$114114 ​million, capital expenditures of ​$212212 ​million, and no interest expenses. Working capital increased by ​$1313 million. Calculate the free cash flow for Cellular Access for the most recent fiscal year. Part 1The free cash flow for Cellular Access for the most recent fiscal year is ​$[input]enter your response here million. ​ (Round to the nearest​ integer.)

BlackTom AI · Accepted Answer

Free cash flow (FCF) equals net cash generated by operations after accounting for necessary investments in fixed assets and working capital. The standard formula used here is:
FCF = Net income + Depreciation (non‑cash expense added back) − Capital expenditures − Increase in working capital.

Relevant concepts:
- Net income is the profit after taxes and non‑operating items.  
- Depreciation is a non‑cash expense and therefore is added back to net income when computing cash flow.  
- Capital expenditures (CapEx) are cash outflows to acquire or maintain fixed assets and must be subtracted.  
- An increase in working capital consumes cash, so it is subtracted; a decrease would be added.

Step‑by‑step calculation with intermediate steps:
1. Start with net income: $256,256 million.
2. Add depreciation: $256,256 + $114,114 = $370,370 million. (Depreciation is non‑cash so it increases cash flow.)
3. Subtract capital expenditures: $370,370 − $212,212 = $158,158 million.
4. Subtract the increase in working capital: $158,158 − $1,313 = $156,845 million.

Why this is correct:
- Depreciation was included as a non‑cash expense and therefore added back to net income.  
- Capital expenditures and the increase in working capital are true cash outflows and correctly subtracted.  
- There are no interest expenses to adjust for, so no additional interest‑tax adjustments are required.

Common mistakes to avoid:
- Omitting the depreciation add‑back (would understate FCF).  
- Failing to subtract the working capital increase (would overstate FCF).  
- Misreading the magnitudes of the figures (note the thousands separators).

Conclusion: The computed free cash flow is $156,845 million, which matches the provided answer (156845).

类似问题

The EBIT of a firm is $300, the tax rate is 35%, the depreciation is $20, capital expenditures are $60, and the increase in net working capital is $30. What is the free cash flow to the firm?

Estimates of a stock's intrinsic value calculated with the free cash flow methodology depend most critically on __________.[Fill in the blank]

A firm reports: EBIT = $800M; Tax rate = 25%; D&A = $150M; CapEx = $250M; Increase in net working capital = $40M. Compute Free Cash Flow to the Firm (FCFF). (Answer in $M.)

Below is an excerpt from the cash flow statement of a firm for fiscal year 2003:What is the free cash flow for 2003?

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