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calculate the amount of free cash flow for gap inc for the year ended january 31 199 540253

Calculate the amount of free cash flow for Gap Inc., for the year ended January 31, 1998. State any assumptions that you make in your calculations.

Gap Inc., Statement of Cash Flows, in thousands

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CASH FLOWS FROM OPERATING ACTIVITIES

Net earnings

$53,901

Adjustments to reconcile net earnings to net cash provided by operating

activities

Depreciation and amortization

269,706

Tax benefit from exercise of stock options by employees and from vesting

of restricted stock

23,682

Deferred income taxes

(13,706)

Change in operating assets and liabilities

Merchandise inventory

(156,091)

Prepaid expenses and other

(44,736)

Accounts payable

63,532

Accrued expenses

107,365

Income taxes payable

(8,214)

Deferred lease credits and other long-term liabilities

69,212

Net cash provided by operating activities

$844,651

CASH FLOWS FROM INVESTING ACTIVITIES

Net maturity (purchase) of short-term investments

174,709

Net purchase of long-term investments

(2,939)

Net purchase of property and equipment

(465,843)

Acquisition of lease rights and other assets

19,779

Net cash used for investing activities

(313,852)

CASH FLOWS FROM FINANCING ACTIVITIES

Net increase in notes payable

44,462

Net issuance of long-term debt

495,890

Issuance of common stock

30,653

Net purchase of treasury stock

(593,142)

Cash dividends paid

(79,503)

Net cash used for financing activities

(101,640)

Gap Inc., Income Statement, in thousands

Net sales

$6,507825

Costs and expenses

Cost of goods sold and occupancy expenses

4,021,541

Operating expenses

1,635,017

Net interest income

(2,975)

Earnings before income taxes

$842,242

Income taxes

320,341

Net earnings

$533,901

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