Given the financial data for New Electronic World, Inc. (NEW), compute the following measures of cash flows for the NEW for the year ended December 31, 2005

(a) Operating Cash Flow.

(b) Free Cash Flow.

For the year ended December 31,

A) OCF = EBIT(1-T)+Depreciation OCF = 30 000 – 8 000 + 3 000

OCF = 25 000

B) FCF = OCF – NFAI – NCAI NFAI = Change in fixed asset + Depreciation NFAI = (24 000 – 22 000) + 3 000 = 5 000 NCAI = Change in curr. A – Change in (Acc. Payable + Accruals) NCAI = (99 000 – 87 000) – (32 000 – 26 000) = 6 000

FCF = 25 000 – 5 000 – 6 000 = 14 000