Following the Trail: Identifying Hard and Soft Components of Income (Easy) A firm reported after-tax...

Question

Following the Trail: Identifying Hard and Soft Components of Income (Easy) A firm reported after-tax operating income of $1,298 million. Free cash flow of $234 million was calculated from the cash flow statement.

a. Identify the "hard" and "soft" components of the income.

b. The free cash flow is after $687 million in cash investments. What were the operating accruals for the year?

Robert · Accepted Answer

a. 
Free cash flow = $234 
The “soft” part of OI is that which is due to change in net operating assets: 
  $1298 234
$1064
OI FreeCash flow NOA
NOA
 
  

  
b.

Following the Trail: Identifying Hard and Soft Components of Income (Easy) A firm reported after-tax operating income of $1,298 million. Free cash flow of $234 million was calculated from the cash...

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