Given the Following Data for a Given Period,compute the Free

question 29

Multiple Choice

Given the following data for a given period,compute the free cash flow to the firm: Net Income = $10,000
After-tax Interest Expense = $1000
Depreciation = $1000
Increase in NWC = $1000
Capital Expenditures = $2000

• A)$9000
• B)$9500
• C)$9700
• D)$9900
• E)$10,500

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Definitions:

Return on Equity Ratio

The return on equity ratio measures a company's profitability by revealing how much profit a company generates with the money shareholders have invested.

Total Asset Turnover

A financial ratio that measures the efficiency of a company's use of its assets in generating sales revenue by comparing sales with total assets.

Current Ratio

An indicator used to evaluate whether a business can meet its short-term financial liabilities, calculated through the division of its current assets by its current liabilities.

Return on Equity

A financial ratio measuring the profitability of a business in relation to the equity held by the shareholders.