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A recent annual income statement for Stone Creek Roofing is shown below. Net sales $5,000 Cost...

A recent annual income statement for Stone Creek Roofing is shown below.

Net sales $5,000
Cost of sales 3,200
Gross profit 1,800
Operating expense 800
Depreciation expense 200
Operating income 800
Interest expense 100
Income before tax 700
Tax 175
Income after tax $ 525



Assume that during the year, Stone Creek spent $180 on new capital equipment and increased current assets net of non-interest-bearing current liabilities by $120. What was Stone Creek’s free cash flow in this year?

$425

$500

$700

$725

$740

None of the options are correct.
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