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4 years ago

Companies can use free cash flow to: Select one:

Business

1 answer:

stellarik [79]4 years ago

4 0

Answer:

d.All of the above.

Explanation:

Free cash flow is the amount of cash that is available for management to use in any way they want (at their discretion), after all essential payments have been made.

Essential payment may include taxation payment and other operational expenditure.

Keeping in view the above discussion, it can be assumed that the free cash flow can be used to pay additional dividends, acquire more property, plant and equipment and pay off debts.

Therefore the answer is d.All of the above.

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Blue Hamster Manufacturing INC, is a small firm, and several of its managers are worried about how soon the firm will be able to

Eddi Din [679]

Answer and Explanation:

1. The computation is shown below:-

Year 0 Year 1 Year 2 Year 3

Expected Cash flow ($6,000,000) $2,400,000 $5,100,000 $2,100,000

Cumulative Cash

flow ($6,000,000) ($3,600,000) $1,500,000 $3,600,000

Conventional Payback

Period 1 0.71

For the computation of cumulative cash flow for the first year, we simply deduct expected cash flow the Year 0 from Year 1 for the second year we added the Cumulative cash flow of year 1 with the expected cash flow of year 2 and for third year we added Expected cash flow of year 3 with a cumulative cash flow of year 2

and for conventional payback period for year 1

Conventional Payback Period = 1 + ($3,600,000 ÷ $5,100,000)

= 1 + 0.71

= 1.71 year

2. The computation is shown below:-

Year 0 Year 1 Year 2 Year 3

Expected Cash flow ($6,000,000) $2,400,000 $5,100,000 $2,100,000

Discount factor at

9% 1 0.91743 0.84168 0.77218

Discounted Cash

Flow ($6,000,000) $2,201,835 $4,292,568 $1,621,585

Cumulative Discounted

Cash Flow ($6,000,000) ($3,798,165) $494,403 $2,115,988

Discounted Payback

Period 1 0.88

Conventional Payback Period = 1 + ($3,798,165 ÷ $4,292,568)

= 1 + 0.88

= 1.88 year

3. B. Discounted Payback Period.

The payback period is the period in which it tells in how many years the initial investment amount could be recovered and the discounted payback period is the period in which the cash outflows and the cash inflows are discounted

4. B. $2,115,988 which shows the more than the higher the cash inflow above the project investment value.

4 0

3 years ago

Preparing T-accounts (ledger) and a trial balance LO P2 Following are the transactions of a new company called Pose-for-Pics.

Taya2010 [7]

Answer:

a) T-Accounts:

Date Description Debit Credit

Common Stock

Aug. 1 Cash $6,500

Photography Equipment 33,500

Aug. 31 Balance $40,000

Date Description Debit Credit

Cash Account

Aug. 1 Common Stock $6,500

Aug. 2 Prepaid Insurance $2,100

Aug. 5 Office Supplies $880

Aug. 20 Fees Earned $3,331

Aug. 31 Utilities $675

Aug. 31 Balance $6,176

Date Description Debit Credit

Photography Equipment

Aug. 1 Common Stock $33,500

Date Description Debit Credit

Prepaid Insurance Account

Aug. 2 Cash $2,100

Date Description Debit Credit

Office Supplies

Aug. 5 Cash $880

Date Description Debit Credit

Fees Revenue

Aug. 20 Cash $3,331

Date Description Debit Credit

Utilities Expense

Aug. 31 Cash $675

b) Trial Balance as of August 31:

Accounts Debit Credit

Cash $6,176

Photography Equip 33,500

Prepaid Insurance 2,100

Office Supplies 880

Utilities Expense 675

Common Stock $40,000

Fees Revenue 3,331

Total $43,331 $43,331

Explanation:

a) The Common Stock equals the cash and equipment contribution made by Madison Harris, the owner of Pose-for-Pics.

b) Pose-for-Pics' T-accounts are the general ledger accounts of the company. They record the individual accounts' transactions for the accounting period, usually a month, which are summarized by the preparation of the trial balance as of month-end.

3 0

3 years ago

A retired athlete built a gym near his house that could be used for free by all the residents in the neighborhood. However, the

zhuklara [117]

Answer:

Tragedy of the commons.

Explanation:

The "Tragedy of the Commons" refers to the phenomenon where People overuse a common resource. It is a situation arise when individual user share resources with much other and demand increase in comparison to the supply of resources, which lead to depletion, destruction, or damage to resources due to overconsumption. It can be prevented by using certain measures like fixing ownership of resources, assigning basic rules and regulations for usage of resources, penalizing for damage, etc.

In the given case, a retired athlete built a gym and made it common and free for neighborhood residents, which lead to overuse of gym facility and that is a tragedy of common arise.

4 0

3 years ago

Boursaw Corporation has provided the following data concerning last month’s operations. Purchases of raw materials $33,000 Indir

m_a_m_a [10]

Answer:

COGS= $136,000

Explanation:

First, we need to calculate the cost of goods manufactured:

cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP

We deduct the indirect material from the direct material purchase, so we don't sum it twice.

Because it is the unadjusted cost of goods sold, we take into account the allocated overhead.

cost of goods manufactured= 56,000 + (10,000 + 33,000 - 4,000 - 15,000) + 58,000 + 78,000 - 72,000

cost of goods manufactured= $144,000

To calculate the unadjusted cost of goods sold, we need to use the following formula:

COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory

COGS= 41,000 + 144,000 - 49,000

COGS= $136,000

6 0

4 years ago

A company has net credit sales of $750,000 for the year and it estimates that uncollectible accounts will be 2% of sales. If All

shtirl [24]

Answer:

the balance after adjustment would be a credit of $17,000

Explanation:

The computation of the balance after adjustment is shown below:

= Uncollectible amount + credit balance of allowance for doubtful debts

= $750,000 × 2% + $2,000

= $15,000 + $2,000

= $17,000

Hence, the balance after adjustment would be a credit of $17,000

We simply applied the above formula so that the correct value could come

And, the same is to be considered

3 0

3 years ago