Question

Sheridan Company had the following transactions that took place during the year: I. Paid amount owing to suppliers $2370. II. Purchased new equipment for $4300 by signing a long-term note payable. III. Purchased a patent and paid $12900 cash for the asset. How what is the total effect of these transactions on free cash flow?

Answer 1

Answer:

cash flow = $15270

so we can say that free cash flow will be decrease

Explanation:

given data

Paid amount owing = $2370

Purchased equipment = $4300

Purchased patent = $12900

to find out

total effect of these transactions on free cash flow

solution

we get here cash flow that cash flow amount will reduce by the amount of cash paid  that is express as

and equipment is not purchased for cash so that it not affect cash flow so

cash flow = Paid amount owing + Purchased patent   ........1

put here value we get

cash flow = $2370 + $12900

cash flow = $15270

so we can say that free cash flow will be decrease