Washington enterprises had a net income of $1,000,000, invested $150,000 in fixed assets, paid $50,000 in dividends, and took depreciation expense of $80,000 the free cash flow was $9,30,000
Free Cash Flow is the cash an agency generates after taking into account coins outflows that help its operations and maintain its capital assets. In different phrases, unfastened cash goes with the flow of the cash left over after an organization will pay for its running prices and capital fees.
To calculate free cash flow use the formula:
Free cash flow = Net income + Depreciation - Fixed capital
Given,
Net income = 10,00,000
Depreciation = 80,000
Fixed capital = 1,50,000
Putting the values in the formula
Free cash flow = 1000000 + 80000 - 150000
Free cash flow = $9,30,000
Free Cash Flow measures an organization's financial overall performance. It suggests the coins that a corporation can produce after deducting the purchase of property together with assets, devices, and different most important investments from its operating cash flow activities.
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