Hinck Corporation reported net cash provided by operating activities of $361,200, net cash used by investing activities of $148,900 (including cash spent for capital assets of $203,600), and net cash provided by financing activities of $79,700. Dividends of $128,000 were paid.
Calculate free cash flow.
Calculating Free Cash Flow:
Free cash flow is calculated as part of financial analysis in order to show the amount of cash a company has generated that is available to pay dividends and invest in future operations.
Answer and Explanation:
The free cash flow can be calculated from the cash flow statement like this:
|Operating cash flow||$361,200|
|Less: Capital expenditures||(203,600)|
|= Free Cash Flow||$157,600|
You can also calculate free cash flow from the income statement using this formula:
Free cash flow = Net operating profit after taxes (NOPAT) - Capital Expenditures
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from Finance 101: Principles of FinanceChapter 10 / Lesson 4