Chapter 13, Problem 13.1MAD

a.

To determine

Statement of cash flows:

Statement of cash flow is a financial statement that shows the cash and cash equivalents of a company for a particular period of time. It shows the net changes in cash, by reporting the sources and uses of cash as a result of operating, investing, and financing activities of a company.

Free cash flow:

Free cash flow describes the net cash provided from operating activities after making required adjustments for dividends and capital expenditures. In other words, it is the cash flow arrived after making payment for capital expenditures and dividend payments.

To Determine: The free cash flow for all three companies.

b.

To determine

To Compute: The ratio of free cash flow to sales for all three companies.

c.

To determine

To Discuss: The way in which Incorporation A compares to the other two companies with respect to generating free cash flow.