This year, FCF Inc. has earnings before interest and taxes of $10 comma 400 comma 000, depreciation expenses of $1 comma 000 comma 000, capital expenditures of $1 comma 900 comma 000, and has increased its net working capital by $ 575 comma 000. If its tax rate is 30 %, what is its free cash flow?

Free cash flow is $8,925,000

Explanation:

Free cash flow is the net cash cashflow available for the shareholders or for the reinvestment after paying all capital expenditure.

Free Cash flow

Earning Before Interest and Tax            $10,400,000

Add: Depreciation expenses                  $1,000,000

Less: Capital expenditures                      $1,900,000

Less: Increase in net working capital     $575,000    

Free cashflow                                           $8,925,000

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