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Free Cash Flow The following information is from the financial statements of Smith & Sons. Cash...

Free Cash Flow
The following information is from the financial statements of Smith & Sons.

Cash flow from operating activities $2,100,000
Capital expenditures 1,190,000
Current liabilities, beginning of year 420,000
Current liabilities, end of year 504,000

Calculate the free cash flow for Smith & Sons.

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Answer #1

Free Cash Flow For Smith & Sons = $ 9,10,000

Smith & Sons. Statement of Cash Flows

Cash flows from operating activities:

$ 21,00,000

Cash flows from investing activities:

Capital expenditures          

($ 11,90,000)

Cash flows from financing activities:

-

Net increase in cash

$ 9,10,000

Beginning cash balance

-

Ending cash balance

-

Increase or decrease in Current Liabilities shall not be considered, Since it is already adjusted in Cash flows from operating activities

Cash flows from operating activities is calculated as follows

Net Income+ Depreciation Expense (+ Increase and -Decrease in Accumulated Depreciation)

+ Increases in Current Liabilities

+ Decreases in Current Assets

– Increases in Current Assets

– Decreases in Current Liabilities

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