Calculate the firm’s free cash flow to equity (FCFE) for 2025. Note: Provide your answer without currency units, i.e., X,XXX.

Question

Calculate the firm’s free cash flow to equity (FCFE) for 2025. Note: Provide your answer without currency units, i.e., X,XXX.

BlackTom AI · Accepted Answer

This question asks for the firm’s free cash flow to equity (FCFE) for 2025 and provides a numeric answer of 525 with no answer choices.
To reason about FCFE, we should outline the standard calculation framework so you know what data would be required: FCFE = Net Income + Non-cash charges (e.g., Depreciation and Amortization) - Capital Expenditures - Changes in Net Working Capital + Net Borrowing (new debt minus repayments).
- Net Income (NI): Start with the earnings available to equity holders after all expenses, taxes, and interest.
- Non-cash charges: Add back depreciation/amortization because they reduce NI but do not involve cash outflows.
- Capital Expenditures (Capex): Subtract cash spent on sustaining or expanding fixed assets.
- Changes in Net Working Capital (ΔNWC): If working capital increases, cash is tied up (subtract the change); if it decreases, cash is freed (add back).
- Net Borrowing: Include new debt issued minus debt repayments, since financing activity affects cash available to equity holders.
If you have a provided numeric answer of 525 but no accompanying data, you cannot verify it against the formula without the underlying financial figures. In practice, you would plug in the exact NI, D&A, Capex, ΔNWC, and net borrowing for 2025 and perform the calculation as above to confirm FCFE.
Suppose you were given a complete set of figures (for example: NI, D&A, Capex, ΔNWC, and net borrowing). You would substitute them into FCFE = NI + D&A - Capex - ΔNWC + Net Borrowing and compute the result, then present it without currency units as requested (e.g., 525).
If any component were unfamiliar, such as whether to treat a decrease in working capital as a cash inflow or an outflow, recall that an increase in working capital consumes cash (subtract), while a decrease frees cash (add).
In sum, the critical path to validating FCFE is to obtain all four categories—operations (NI and non-cash charges), investing (Capex), working capital changes, and financing (net borrowing)—and apply the standard FCFE formula precisely. If the problem statement provides only the final numeric answer (525) without the supporting numbers, there is no way to independently verify it from first principles within the given data constraints.

ACCT10001_2025_SM2 Exam: Accounting Reports and Analysis (ACCT10001_2025_SM2)- Requires Respondus LockDown Browser

Calculate the firm’s free cash flow to equity (FCFE) for 2025. Note: Provide your answer without currency units, i.e., X,XXX.

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