The Data that will be used for the entire analysis is as follows
Operating Income = $ 5 Million Depreciation Expense = $ 1 Million Interest Expense = $ 1 Million Corporate Tax Rate = 40%
Net Income of Rattner Robotics is as followsOperating Income $ 5 Million Less: Interest Expense $ 1 Million Net Income before Tax = $ 4 Million Tax 40% = $ 1.6 Million Net Income after Tax = $ 2.4 Million
Net Operating Working Capital (NOWC) of Rattner Robotics is as followsNOWC = Current Assets – Account Payable = $ 3.4 Million NOWC = $ 3.4 Million Assume that all the current assets and current liabilities are operating, and then the net working capital of the company will be the same like Net Operating Working Capital. = Current Assets + Net Income - liabilities = $ 3 million
The Free cash flow (FCF) of the company is as followsFCF = EBIT (1-Tax Rate) + Depreciation – Change in Working Capital – Capital Expenditure = Continue reading...
