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20 September, 10:31

Free Cash Flow Catering Corp. reported free cash flows for 2008 of $8.19 million and investment in operating capital of $2.19 million. Catering listed $0.9 million in depreciation expense and $2.19 million in taxes on its 2008 income statement. What was Catering's 2008 EBIT?

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  1. 20 September, 10:37
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    EBIT is $11.67 million

    Explanation:

    For computing the EBIT, first we have to calculate the operating cash flow which is shown below:

    FCF = Operating cash flow - Investment in operating capital

    $8.19 million = Operating cash flow - $2.19 million

    So, the Operating cash flow = $10.38 million

    Now we apply the operating cash flow which is shown below:

    The operating cash flow is shown below:

    = EBIT + Depreciation - Income tax expense

    $10.38 million = EBIT + $0.9 million - 2.19 million

    $10.38 million = EBIT - $1.29 million

    So, EBIT is $11.67 million
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Home » Business » Free Cash Flow Catering Corp. reported free cash flows for 2008 of $8.19 million and investment in operating capital of $2.19 million. Catering listed $0.9 million in depreciation expense and $2.19 million in taxes on its 2008 income statement.
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