# Margetis Inc. wants to increase its free cash flow by $270 million during the coming year, which... ## Question: Margetis Inc. wants to increase its free cash flow by$270 million during the coming year, which should result in a higher EVA and stock price. The CFO has made these projections for the upcoming year: EBIT is projected to equal $1,275 million. Gross capital expenditures are expected to total to$540 million versus depreciation of $180 million, so its net capital expenditures should total$360 million. The tax rate is 40%. There will be no changes in cash or marketable securities, nor will there be any changes in notes payable or accruals.

What increase in net working capital (in millions of dollars) would enable the firm to meet its target increase in FCF?

## Net Working Capital:

Net working capital is the aggregate value of all the current assets and current liabilities. Through this, we can measure the short term liability of the firm or a business.

## Answer and Explanation:

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How to Calculate Net Working Capital: Definition & Formula

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Chapter 5 / Lesson 22
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To operate effectively, businesses must be able to pay their bills as they become due. The best way to determine a business' ability to pay its bills is to calculate its net working capital. Learn what net working capital is and how to calculate it in this lesson.