Finding operating and free cash flows-Consider the following balance sheets

P2. Finding operating and free cash flowsConsider the following balance sheets and selected data from the income statement of Keith Corporation, then prepare answers for the accompanying questions:Keith Corporation Balance SheetsAssets 12/31/2009 12/31/2008Cash $ 1,500 $ 1,000Marketable securities 1,800 1,200Accounts receivable 2,000 1,899Inventories 2,900 2,800Total current assets $ 8,200 $ 6,800Gross fixed assets $ 29,500 $ 28,100Less: Accumulated depreciation 14,700 13,100Net fixed assets $ 14,800 $ 15,100Total assets $ 23,000 $ 21,800Liabilities and Stockholder’s EquityAccounts payable $ 1,600 $ 1,500Notes payable 2,800 2,200Accruals 200 300Total current liabilities $ 4,600 $ 4,000Long-term debt 5,000 5,000Total liabilities $ 9,600 $ 9,000Common stock $ 10,000 $ 10,000Retained earnings 3,400 2,800Total stockholder’s equity $ 13,400 $ 12,800Total liabilities and owners equity $ 23,000 $ 21,800Keith Corporation Income Statement Data (2109)Depreciation expense $ 1,600Earnings before interest and taxes 2,700Interest expense 367Net profits after taxes 1,400Tax rate 40%a. Calculate the firm’s accounting cash flow from operations for the year ended December 31, 2009, using: Cash flow from operations = net profits after tax + depreciationb. Calculate the firm’s net operating profit after taxes (NOPAT) for the year ended December 31, 2009, using Equation: NOPAT = EBIT x (1 – T)c. Calculate the firm’s operating cash flow (OCF) for the year ended December 31, 2009, using Equation: OCF = NOPAT + Depreciationd. Calculate the firm’s free cash flow (FCF) for the year ended December 31, 2009, using the Equation in P1, above.e. Interpret, compare, and contrast your cash flow estimates in parts a, c, and d.