You Are Considering an Investment in Fields and Struthers, Inc

question 54

Multiple Choice

You are considering an investment in Fields and Struthers, Inc. and want to evaluate the firm's free cash flow. From the income statement, you see that Fields and Struthers earned an EBIT of $52 million, paid taxes of $10 million, and its depreciation expense was $5 million. Fields and Struthers' gross fixed assets increased by $38 million from 2017 to 2018. The firm's current assets increased by $20 million and spontaneous current liabilities increased by $12 million. Calculate Fields and Struthers' operating cash flow (OCF) , investment in operating capital (IOC) , and free cash flow (FCF) for 2018.

• A) OCF = $42,000,000; IOC = $37,000,000; FCF = $5,000,000
• B) OCF = $47,000,000; IOC = $37,000,000; FCF = $10,000,000
• C) OCF = $42,000,000; IOC = $46,000,000; FCF = −$4,000,000
• D) OCF = $47,000,000; IOC = $46,000,000; FCF = $1,000,000

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Definitions:

Vascular Cylinder

The central part of a plant's root system that contains the plant's vascular tissue, including xylem and phloem, for water and nutrient transport.

Casparian Strip

A band of cell wall material in the roots of plants that is impervious to water and solutes, controlling the flow into the vascular system.

Endodermis

The endodermis is the innermost layer of cells in the root cortex of plants, serving as a selective barrier that regulates the flow of water and nutrients from the soil into the vascular system.

Vascular Cylinder

The central part of a root or stem containing the plant's vascular tissue, including xylem and phloem, responsible for water and nutrient transport.