Question

During 2017, Kingbird, Inc. reported cash provided by operations of $905000, cash used in investing of $782000, and cash used in financing of $217000. In addition, cash spent for fixed assets during the period was $315000. Average current liabilities were $741000 and average total liabilities were $1956000. No dividends were paid. Based on this information, what was Kingbird free cash flow?

Answer 1

Answer:

Kingbird's free cash flow is $590,000

Explanation:

Given:

Cash from operations = $905,000

Cash spent on fixed assets = $315,000

Cash used in investing activities = ($782,000)

Cash used in financing activities = ($217,000)

Free cash flow = Cash from operations - capital expenditures

Capital expenditures are expenditure incurred on acquiring long term assets. Cash spent on fixed assets is capital expenditure.

Substitute the values in the above formula:

Free cash flow = 905,000 - 315,000

                         = $590,000