Why is the investment in net operating capital deducted in calculating the free cash flow?

s free cash flows for 2010 through 2 Show more Use the data developed in the table to construct the L divisions free cash flows for 2010 through 2014. Why are we identifying interest expense separately since it is not normally included in calculating free cash flows or in a capital budgeting cash flow analysis? Why is the investment in net operating capital deducted in calculating the free cash flow? 2009 2010 2011 2012 2013 2014 Net sales Net sales $ 60.0 $ 90.0 $ 112.5 $ 127.5 $ 139.7 Cost of goods sold (60%) Cost of goods sold (60%) Cost of goods sold (60%) 36.0 54.0 67.5 76.5 83.8 Selling/administrative expense Selling/administrative expense Selling/administrative expense 4.5 6.0 7.5 9.0 11.0 EBIT 19.5 30.0 37.5 42.0 44.9 Taxes on EBIT (40%) Taxes on EBIT (40%) Taxes on EBIT (40%) 7.8 12.0 15.0 16.8 18.0 NOPAT 11.7 18.0 22.5 25.2 26.9 Total net operating capital Total net operating capital Total net operating capital 150.0 150.0 157.5 163.5 168.0 173.0 Investment in operating capital Investment in operating capital Investment in operating capital 0.0 7.5 6.0 4.5 5.0 Free Cash Flow Free Cash Flow 11.70 10.50 16.50 20.70 21.94 Interest expense Interest expense 5.00 6.50 6.50 7.00 8.16 Tax savings from interest Tax savings from interest Tax savings from interest $ 2.000 $ 2.600 $ 2.600 $ 2.800 $ 3.264 Show less