All cases
Build FCFF for a packaging producer
Bridge operating profit to free cash flow · Fictional case
The situation
EBIT is ₹80 crore, tax rate 25%, depreciation ₹10 crore, capex ₹18 crore and operating working capital rises ₹7 crore.
Your task
How much FCFF does the business produce?
Reveal step-by-step solution
Set up the problem
After-tax operating profit = ₹80 × 75% = ₹60 crore.
Work through the numbers
FCFF = ₹60 + ₹10 − ₹18 − ₹7 = ₹45 crore.
Interpret the result
₹45 crore is before debt payments and new borrowing. Check whether capex and working capital are sustainable.
What to remember
Start with operating profit after operating taxes and subtract reinvestment. Match FCFF to WACC.