Question

First let's consider whether the company has the cash in place to execute the repurchase or whether it may need to seek outside financing. (In recent years, many companies have taken advantage of low interest rates and borrowed money, raising Debt, to finance share repurchases.) In this instance, the company has announced it will self finance the repurchase. Other times, the company may not indicate how it is financing the repurchase and the analyst will determine whether it will be through: (a) Cash on hand (Excess Cash on the Balance Sheet) (b) projected Free Cash Flows (c ) new Debt financing The 'Cash Flow Statement' Sheet will automatically calculate Free Cash Flows based on your Income Statement and Balance Sheet forecasts. As a reminder, we already used the 'Income Statement (GAAP)' Sheet to forecast 2020E and 2021E earnings in line with the consensus forecast for revenues and earnings. Our Balance Sheet forecasts are set at the default levels, which rise and fall with the forecast for Revenues. How much Free Cash Flow do you forecast Microsoft will generate in FY2020E ($ Millions)? Do you think Microsoft can self finance this repurchase with its Free Cash Flows?

          First let's consider whether the company has the cash in place to execute the repurchase or whether it may need to seek outside financing. (In recent years, many companies have taken advantage of low interest rates and borrowed money, raising Debt, to finance share repurchases.) In this instance, the company has announced it will self finance the repurchase. Other times, the company may not indicate how it is financing the repurchase and the analyst will determine whether it will be through: (a) Cash on hand (Excess Cash on the Balance Sheet) (b) projected Free Cash Flows  (c ) new Debt financing The 'Cash Flow Statement' Sheet will automatically calculate Free Cash Flows based on your Income Statement and Balance Sheet forecasts. As a reminder, we already used the 'Income Statement (GAAP)' Sheet to forecast 2020E and 2021E earnings in line with the consensus forecast for revenues and earnings. Our Balance Sheet forecasts are set at the default levels, which rise and fall with the forecast for Revenues. How much Free Cash Flow do you forecast Microsoft will generate in FY2020E ($ Millions)?   Do you think Microsoft can self finance this repurchase with its Free Cash Flows?

Added by Kristin S.

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