SOLUTION: Last year Rattner Robotics had $5 million in operating income (EBIT). The company had net depreciation expense of $1 million; its coporate tax rate was 40 percent. The company h

Question 85204: Last year Rattner Robotics had $5 million in operating income (EBIT). The company had net depreciation expense of $1 million; its coporate tax rate was 40 percent. The company has $14 million in current assets and $ 4 million in non-interest bearing current liabilities; it has $ 15 million in net plant and equipment. It estimates that it has an after tax cost of capital of 10 percent. Assume that Rattners only noncash item was depreciation.

A. What was the companys net income for the year?
B. What was the companys net cash flow?
C. What was the companys net operating profit after taxes(NOPAT)?
D. What was the companys operating cash flow?
E. If operating capital in the previous year was $24 million what was the companys free cash flow (fcf) for the year?
F.What was the company's economic Value Added(EVA)?

I need help with this and wasnt quite sure which category to place it in. Any help would be greatful.
Answer by jim_thompson5910(21685) (Show Source):
You can put this solution on YOUR website!
I'm not sure how to do these type of problems, but here is a solution from Yahoo Answers

Originally posted by Dawn
"I'm tempted to solve these for you, but I think you must do your homework for you to learn. I'll just give you these formulas to help you:
1. Net income = EBIT - (taxes + interest expense)
2. Cash Flow After Tax = Net income + Depreciation + amortization + non-cash charges
3. NOPAT = EBIT x (1 - Tax Rate)
4. Operating Cash Flow = EBIT + depreciation - taxes
5. Free cash flow = net income + amortization + depreciation - changes in working capital - capital expenses
*changes in working capital would be operating capital this year less the operating capital in the previous year.
6. EVA = NOPAT - (capital * cost of capital)"