Tareque Inc. wants to increase its free cash flow by $180 million during the coming year, which should result in a higher EVA and share price. The CFO has made these projections for the upcoming year:
– EBIT is projected to be $850 million.
– Gross capital expenditures are expected to total $360 million versus depreciation of $120 million, so its net capital expenditures should total $240 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.
Which of the following actions would enable the company to achieve its goal of generating $180 million in free cash flow?
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accounts receivable increase by $470 million, inventory increases by $230 million, and accounts payable increase by $790 million
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accounts receivable increase by $470 million, inventory increases by $230 million, and accounts payable increase by $610 million
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accounts receivable decrease by $500 million, inventory increases by $480 million, and accounts payable decline by $80 million
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accounts receivable decrease by $400 million, inventory increases by $480 million, and accounts payable increase by $80 million
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