Chapter 14, Problem 8QC

To determine

Free cash flow:

Free cash flow is defined as an evaluation of financial performance of a company. It 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.

The following formula is used to calculate free cash flow.

$\text{Free cash flow = }\left(\begin{array}{l}\text{Net cash provided by operating activities}-\\ \text{Cash payments planned for investments }\\ \text{in long-term assets}-\text{Cash dividends}\end{array}\right)$

To Compute: Free cash flow of H Incorporation.