Assume that a company provided the following statement of cash flows (all sales are on account): Operating activities: Net income $ 57Adjustments to convert net income to a cash basis: Depreciation$ 15 Decrease in accounts receivable2 Increase in inventory(10) Increase in accounts payable411Net cash provided by (used in) operating activities 68Investing activities: Additions to property, plant, & equipment(40) Net cash provided by (used in) investing activities (40)Financing activities: Issuance of common stock5 Cash dividends paid(26) Net cash provided by (used in) financing activities (21)Net increase in cash and cash equivalents 7Beginning cash and cash equivalents 6Ending cash and cash equivalents $ 13How much is the company’s free cash flow? Multiple Choice $19 $(21) $2 $23

Introduction:- Free cash flow shows or measures the amount of cash generated each year that is free after it has paid for everything it needs to continue operating.Explanations:- Free Cash flow =Net cash provided by (used in) operating activities + Net cash provided by (used in) investing activities - Cash dividend paid =$68 - $40 - $26 =$2Conclusion:- As per the above discussions option "C" is the correct answer, which satisfies the given requirement and remaining options do not satisfy the given requirement... I hope helpful to you… If you are satisfied... Support me... Thank you...

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Assume that a company provided the following statement of cash flows (all sales are on account):

Operating activities:
Net income		$ 57
Adjustments to convert net income to a cash basis:
Depreciation	$ 15
Decrease in accounts receivable	2
Increase in inventory	(10)
Increase in accounts payable	4	11
Net cash provided by (used in) operating activities		68
Investing activities:
Additions to property, plant, & equipment	(40)
Net cash provided by (used in) investing activities		(40)
Financing activities:
Issuance of common stock	5
Cash dividends paid	(26)
Net cash provided by (used in) financing activities		(21)
Net increase in cash and cash equivalents		7
Beginning cash and cash equivalents		6
Ending cash and cash equivalents		$ 13

How much is the company’s free cash flow?

Multiple Choice

$19
$(21)
$2
$23

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