What is the free cash flow (FCF) for 2005?
a) $50 b) $245 c) $295 d) $435 e) $515
In corporate finance, free cash flow (FCF) is a way of looking at a business's cash flow to see what is available for distribution among all the securities holders of a corporate entity. This may be useful to parties such as equity holders, debt holders, preferred stock holders, convertible security holders, and so on when they want to see how much cash can be extracted from a company without causing issues to its operations. Free Cash Flow 2005 = EBIT x (1-Tax rate) + Depreciation & Amortization - Changes in Working Capital - Capital expenditure = (785 - 460)*(1 - 0.35) + 210 + 35 - 17 = 435 So, the right answer is d) $435