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Management · Q523

Financial Management

Graduate and Post Graduate · Management · question 523

Q523

Net operating profit after taxes is Rs 4500, net investment in operating capital is Rs 8500 and then free cash flow would be

A.
-Rs 4,000.00
Answer
B.
Rs 4,000.00
C.
-Rs 18,000.00
D.
Rs 18,000.00

Answer: Option A

Solution

Answer: Option A
Solution:
Free cash flow = Net operating profit after taxes - Net investment in operating capital
= 4500 - 8500 = Rs. -4000.