Questions
COMM_V 370 101-108 2025W1 COMM 370 2025W1 - Practice Final
Numerical
Last year, the Clarity Corporation had Free Cash Flow (FCF) of $950. Some other financial information from last year: Clarity paid $520 in dividends to its shareholders Clarity paid $250 in interest Clarity's depreciation expense was $120 Clarity repaid $65 of existing debt and issued new debt of $145 Clarity's corporate tax rate is 30% Calculate Clarity's Free Cash Flow to Equity (FCFE) last year (with one decimal).
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Step-by-Step Analysis
To approach this numerical question, I’ll start by identifying the relationships between the given figures and what FCFE represents.
First, recognize that FCFE (free cash flow to equity) can be derived from FCFF (free cash flow to the firm) by adjusting for after‑tax interest and net borrowing: FCFE = FCFF − Interest afte......Login to view full explanationLog in for full answers
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Use Coug Co.’s financial statements below to calculate their FCFE for 20X1: Coug Co. Balance Sheet Assets 20x0 20x1 Current assets Cash $ 295 $ 340 Inventory $ 206 $ 210 Accounts Receivable $ 198 $ 243 Total CA $ 699 $ 793 LT Assets PP&E $ 1,190 $ 1,240 Accumulated Depreciation $ (280) $ (310) Net PP&E $ 910 $ 930 Total Assets $ 1,609 $ 1,723 Liabilities & Equity 20x0 20x1 Current Liabilities Accounts Payable $ 148 $ 166 Notes Payable $ 110 $ 80 Total CL $ 258 $ 246 Long-Term Debt $ 335 $ 360 Total Liabilities $ 593 $ 606 Owners' Equity $ 1,016 $ 1,117 Total Liab. & Equity $ 1,609 $ 1,723 Coug Co. Income Statement 20x1 Revenue $ 1,548.00 COGS $ (423.00) Depreciation $ (388.00) EBIT $ 737.00 Interest Expense $ (124.00) EBT $ 613.00 Taxes $ (147.00) Net Income $ 466.00
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