Question

Alpine Corporation reported the following information for fiscal 2017 and 2016.

December 31 | 2017 | 2016
Operating assets | $164,101 | $153,211
Operating liabilities | 120,785 | 114,836
Net cash flow from operations | 46,709 | 39,540
Net operating profit after tax (NOPAT) | 33,371 | 31,742
Discount factor | 6.0% | 6.0%

What are the company's free cash flows to the firm (FCFF) for 2017?

Answer 1

Answer:

$28,430

Explanation:

We have that FCFF = Net operating profit after tax (NOPAT) - change in net operating assets (NOA)

But NOA = Operating assets - Operating liabilities

2016 NOA = $153,211 - $114,836 = $38,375

2017 NOA = $164,101 - $120,785 = $43,316

Hence, the company's free cash flows to the firm (FCFF) for 2017 is

FCFF = $33,371 - ($43,316 - $38,375) = $28,430