Hinck Corporation reported net cash provided by operating activities of $361,200, net cash used...

Question:

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


Learn more about this topic:

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Operating Cash Flow: Definition & Examples

from Finance 101: Principles of Finance

Chapter 10 / Lesson 4
10K

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