To calculate Whirlpool’s Free Cash Flow (FCF) for this year, we need to follow a series of steps involving the given financial figures.
First, we start with the EBIT (Earnings Before Interest and Taxes), which is given as $200. To find the operating cash flow, we can add back depreciation. Depreciation is a non-cash expense that reduces taxable income but does not involve an actual cash outflow.
The calculation for operating cash flow can be expressed as:
Operating Cash Flow = EBIT + Depreciation
Plugging in the numbers:
Operating Cash Flow = 200 + 30 = 230
Next, we need to adjust this for capital expenditures (CapEx) and changes in net working capital (NWC). CapEx is given as $150 and the increase in NWC is $10.
The Free Cash Flow formula can be expressed as:
Free Cash Flow = Operating Cash Flow - Capital Expenditures - Increase in Net Working Capital
Putting in the values:
Free Cash Flow = 230 - 150 - 10
Free Cash Flow = 70
Thus, Whirlpool’s Free Cash Flow for this year will be $70. This amount indicates the cash generated by the company that is available for distribution among all the securities holders of a corporate entity.