In order to calculate the Free Cash Flow for Columbia Sportswear, I used Net Income in order to
determine the FCFF. The formula used for the calculation is:
FCFF = NI + NCC + Int(1-Tax Rate) – FCInv – WCInv
Where: FCFF = Free Cash Flow to the Firm
NI = Net Income
NCC = Net non-cash charges
Int = Interest Expense (due to this being subtracted out to get net income so we need to
add it back in)
FCInv = Capital Expenditures
WCInv = Current assets and liabilities, less cash and notes payable
The Net Income (NI) found on the Consolidated Statement of Cash Flows is: $93,603,000
The NCC found on the Consolidated Statement of Cash Flows is the sum of the “Adjustments to
reconcile net income to net cash provided by operating activities” which is: $66,379,000
The Int is found on the Consolidated Statements of Operations is $0 because it is income and
was already added into the Net Income thus since it was not subtracted out it does not need to be
added back in.
The Tax Rate I am using is the Corporate Income Tax Rate which is 35% for companies whose
Earnings Before Income Tax (EBIT) is over $18.33 million; Columbia Sportswear’s EBIT was
well above that.
The FCInv is the Capital Expenditures that is found in the Consolidated Statement of Cash
Flows under Cash Flows from Investing Activities and is $69,443,000
The WCInv is found by looking at the Consolidated Balance Sheet and taking the Total Assets
of $1,605,588,000 and minus that by the Cash and cash equivalents of $437,489,000 and getting
$1,168,099,000 as the assets. Then you have minus the liabilities. The liabilities, since Notes
Payable is $0, is $352,724,000. Finally, $1,168,099,000 - $352,724,000 to get $815,735,000.
FCFF = $93,603,000 + $66,379,000 + $738,000(1-0.35) - $69,443,000 - $1,520,823,000
FCFF = $93,603,000 + $66,379,000 + $0 - $69,443,000 - $815,375,000
FCFF = -$724,836,000
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In order to calculate the Free Cash Flow for Under Armour Inc., I used Net Income in order to
determine the FCFF. The formula used for the calculation is:
FCFF = NI + NCC + Int(1-Tax Rate) – FCInv – WCInv
Where: FCFF = Free Cash Flow to the Firm
NI = Net Income
NCC = Net non-cash charges
Int = Interest Expense (due to this being subtracted out to get net income so we need to
add it back in)
FCInv = Capital Expenditures
WCInv = Current assets and liabilities, less cash and notes payable
The Net Income (NI) found on the Consolidated Statement of Cash Flows is: $162,330,000
The NCC found on the Consolidated Statement of Cash Flows is the sum of the “Adjustments to
reconcile net income to net cash provided by operating activities” which is: $91,083,000
The Int is found on the Consolidated Statements of Operations is $2,933,000
The Tax Rate I am using is the Corporate Income Tax Rate which is 35% for companies whose
Earnings Before Income Tax (EBIT) is over $18.33 million.
The FCInv is the Capital Expenditures (or Property and Equipment) that is found in the
Consolidated Statement of Cash Flows under Cash Flows from Investing Activities and is
$87,830,000
The WCInv is $354,692,000
FCFF = $162,330,000 + $91,083,000 + $2,933,000(1-0.35) - $87,830,000 - $354,692,000
FCFF = $162,330,000 + $91,083,000 + $1,906,450 - $87,830,000 - $354,692,000
FCFF = -$187,202,550
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