The 2015 income statement for Egyptian Noise Blasters shows that depreciation ex
ID: 2812904 • Letter: T
Question
The 2015 income statement for Egyptian Noise Blasters shows that depreciation expense is $89 million, NOPAT is $266 million. At the end of the year, the balance of gross fixed assets was $695 million. The change in net operating working capital during the year was $79 million. Egyptian’s free cash flow for the year was $225 million. Calculate the beginning-of-year balance for gross fixed assets. (Enter your answer in millions of dollars.)
The 2015 income statement for Egyptian Noise Blasters shows that depreciation expense is $89 million, NOPAT is $266 million. At the end of the year, the balance of gross fixed assets was $695 million. The change in net operating working capital during the year was $79 million. Egyptian’s free cash flow for the year was $225 million. Calculate the beginning-of-year balance for gross fixed assets. (Enter your answer in millions of dollars.)
The 2015 income statement for Egyptian Noise Blasters shows that depreciation expense is $89 million, NOPAT is $266 million. At the end of the year, the balance of gross fixed assets was $695 million. The change in net operating working capital during the year was $79 million. Egyptian’s free cash flow for the year was $225 million. Calculate the beginning-of-year balance for gross fixed assets. (Enter your answer in millions of dollars.)
Explanation / Answer
Operating Cash Flows = NOPAT + Depreciation
Operating Cash Flows = $266 million + $89 million
Operating Cash Flows = $355 million
Free Cash Flows = Operating Cash Flows - Investment in Operating Capital
$225 million = $355 million - Investment in Operating Capital
Investment in Operating Capital = $130 million
Investment in Operating Capital = Change in Gross Fixed Assets + Change in Net Working Capital
$130 million = Change in Gross Fixed Assets + $79 million
Change in Gross Fixed Assets = $51 million
Change in Gross Fixed Assets = Ending Gross Fixed Assets - Beginning Gross Fixed Assets
$51 million = $695 million - Beginning Gross Fixed Assets
Beginning Gross Fixed Assets = $644 million
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