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What is the free cash flow FCF

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Question - Suppose you are the only owner of a chain of coffee shops near universities. Your current cafe´s are doing well, but you are interested in starting a fine-dining restaurant. You decide to use the cash generated from your existing business to enter into a new business. Your accountant provides you with the following data on your current financial performance:

Financial update as of June 15

Your existing business generates $75,000 in EBIT.

The corporate tax rate applicable to your business is 25%.

The depreciation expense reported in the financial statements is $14,286.

You don't need to spend any money for new equipment in your existing cafe´s; however, you do need $11,250 of additional cash.

You also need to purchase $6,000 in additional supplies-such as table clothes and napkins, and more formal tableware-on credit.

It is also estimated that your accruals, including taxes and wages payable, will increase by $3,750.

What is the free cash flow FCF?

Reference no: EM132846142

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