Bubba Ho-Tep Company Reported Net Income of $300 Million for the Most

question 19

Multiple Choice

Bubba Ho-Tep Company reported net income of $300 million for the most recent fiscal year.The firm had depreciation expenses of $125 million and capital expenditures of $150 million.Although they had no interest expense,the firm did have an increase in net working capital of $20 million.What is Bubba Ho-Tep's free cash flow?

• A)$170 million
• B)$255 million
• C)$150 million
• D)$5 million

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Definitions:

Favorable Variance

A financial term indicating that actual costs were lower than the planned or standard costs in a budget.

Budgeted Amount

The total amount of money that has been allocated for a specific purpose or period of time.

Return on Assets

A financial ratio that measures the profitability of a company in relation to its total assets.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue.