VIPSolutionsYasudevan INC. recently reported operating in come of $ 5 . 3 0 million, depreciation of $ 1 . 2 0 miltion, and had a tax rate of 2 5 % . The firm's expenditures on fixed assets and net operating working Capilal tolated $ 0 . 6 0 million. How much was its free cash flow, in millions?
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Yasudevan INC. recently reported operating in come of $ 5 . 3 0 million, depreciation of $ 1 . 2 0 miltion, and had a tax rate of 2 5 % . The firm's expenditures on fixed assets and net operating working Capilal tolated $ 0 . 6 0 million. How much was its free cash flow, in millions?
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Asked by: Veera manikanta
Created at: 2025-09-12 03:47:00
Asked by: Veera manikanta
Created at: 2025-09-12 03:47:00
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# Yasudevan INC. Free Cash Flow Calculation
Given data:
- **Operating Income (EBIT):** \$5.30 million
- **Depreciation:** \$1.20 million
- **Tax Rate:** 25%
- **Expenditures on Fixed Assets + Change in NOWC:** \$0.60 million
## Step 1: Calculate Net Operating Profit After Taxes (NOPAT)
\[
\text{NOPAT} = \text{EBIT} \times (1 - \text{Tax Rate})
\]
\[
\text{NOPAT} = \$5.30 \times (1 - 0.25) = \$5.30 \times 0.75 = \$3.975 \text{ million}
\]
## Step 2: Calculate Free Cash Flow (FCF)
\[
\text{FCF} = \text{NOPAT} + \text{Depreciation} - (\text{Capital Expenditure} + \Delta \text{NOWC})
\]
\[
\text{FCF} = \$3.975 + \$1.20 - \$0.60 = \$4.575 \text{ million}
\]
## Final Answer
**Yasudevan INC.'s free cash flow is \$4.58 million (rounded to two decimal places).**
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