The objective is to build the income statement (P&L) and calculate the dividend from the net earnings.

Calculate net earnings (EAT) and dividend.

We are, now, going to calculate the operating cash-flow deducting the change in WCR from the (gross) cash-flow. The latest is calculated by only considering the cash items of the P&L. The WCR is supposed to grow at the same rate as sales, i.e. 10%.

Calculate the gross cash-flow, the increase in WCR and the operating cash-flow.

The ‘available’ (or free) cash-flow is obtained by deducting from the operating cash-flow the funds invested by the company in its organic (investments, capital expenditures) and external (acquisition) growth.

The available cash-flow is?

The last step consist in calculating the change in cash position from the available (or free) cash-flow considering all the elements of the corporate financial strategy.

The change in cash is, then, the free cash-flow less dividend (cash-out, see question1), plus funds from capital increase (respectively, less shares buybacks), plus the increase in financial debt (respectively, less the redemption of the debt).

The firm, considering its cash consumption generated by the acquisition, decides an equity issue of 50 and negotiates an additional bank loan of 100.

The change in cash is?