Can an investor have complete confidence that the financial state-
ments of different companies are accurate and that the data reported
by one company are truly comparable to the data provided by
another?
Why might different companies account for similar transactions in
different ways?
What is net operating working capital?
What is total operating capital?
What is NOPAT?
What is free cash flow? Why is free cash flow the most important
determinant of a firm’s value?
A company has NOPAT of $30 million, and its depreciation and
amortization expense is $10 million. During the year the company’s
gross capital expenditures (total purchases of fixed assets) were $20
million and its net operating working capital increased by $10
million. What is the company’s operating cash flow?
What is its free cash flow?
