What will be the free cash flow if cash flow from operation is 850,000 , dividend...

What will be the free cash flow if cash flow from operation is 850,000 , dividend paid 20,000, cash recieved from sale of fixed assets is 2000, purchase of new equipment of 5000. cash flow from financing activity is 300,000.

please show the workings

Expert Solution

Free cash flow is the cash a company produces through its operations, less the cost of expenditures on assets. In other words, free cash flow (FCF) is the cash left over after a company pays for its operating expenses and capital expenditures.

Free cash flow represents the cash flow that is available to all investors before cash is paid out to make debt payments, dividends, or share repurchases. So dividend paid and cash flow from financing activity will not be considered while computing Free cash flow.

Sale of fixed asset will not be considered as part of Free cash flow since it is one time event and not part of every day cash.

Free cash fow=Cash from operations -purchase of new equipment =$850,000-$5,000=$800,000

ekkarill92 answered 2 years ago

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