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Vasudevan Inc. recently reported operating income of $2.3 million, depreciation of $1.20 million, and had a tax rate of 25%. The firm's expenditures on fixed assets and net operating working capital totaled $0.60 million. How much was its free cash flow, in millions?

Respuesta :

Answer:

$2.325 million

Explanation:

Data provided

Earning before interest and tax = $2.3 million

Tax rate = 25%

Depreciation = $1.20

Net operating income = $0.6 million

The computation of free cash flow is shown below:-

= Earning before interest and tax × (1 - Tax rate) + Depreciation - Net operating working capital)

= $2.3 million × (1 - 25%) + $1.20 million - $0.6 million

= $2.325 million

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