Question

Headlands Industries reported net cash provided by operating activities of $436,720, net cash used by investing activities of $265,000, and net cash provided by financing activities of $74,200. In addition, cash spent for capital assets during the period was $212,000. No dividends were paid.
Required:
Calculate free cash flow.

Answer 1

Answer:

Free cash flow is $224,720.00  

Explanation:

The free cash flow in this instance is the cash provided by operating activities less net investment in working capital as well as investment in capital expenditure.

Free cash flow=net cash provided by operating activities-cash paid as dividends-increase in Capital expenditure

net cash provided by operating activities is $436,720

cash paid as dividends is $0

increase in  Capital expenditure is $212,000

free cash flow=$436,720-$0-$212,000=$224,720.00