The world’s Largest Sharp Brain Virtual Experts Marketplace Just a click Away
Levels Tought:
Elementary,Middle School,High School,College,University,PHD
| Teaching Since: | May 2017 |
| Last Sign in: | 431 Weeks Ago, 3 Days Ago |
| Questions Answered: | 66690 |
| Tutorials Posted: | 66688 |
MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
EXERCISE 14–3 Calculating Free Cash Flow [LO3]
Paisley Company prepared the following statement of cash flows for the current year:
|
Operating activities: Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
|
|
$ 40,000 |
|
Adjustments to convert net income to cash basis: Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
$ 22,000 |
|
|
|
Increase in accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . |
(50,000) |
|
|
|
Increase in inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
(35,000) |
|
|
|
Decrease in prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . |
6,000 |
|
|
|
Increase in accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
60,000 |
|
|
|
Decrease in accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
(12,000) |
|
|
|
Increase in income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . |
5,000 |
|
(4,000) |
|
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . |
|
|
36,000 |
|
Investing activities: Proceeds from the sale of equipment . . . . . . . . . . . . . . . . . . . . . . . . |
24,000 |
|
|
|
Loan to Allen Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
(30,000) |
|
|
|
Additions to plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . |
(120,000) |
|
|
|
Net cash used for investing activities . . . . . . . . . . . . . . . . . . . . . . . . |
|
|
(126,000) |
|
Financing activities: Increase in bonds payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
80,000 |
|
|
|
Increase in common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
50,000 |
|
|
|
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
(20,000) |
|
|
|
Net cash provided by financing activities . . . . . . . . . . . . . . . . . . . . . |
|
|
110,000 |
|
Net increase in cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
|
|
(20,000) |
|
Cash balance, beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
|
|
27,000 |
|
Cash balance, end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
|
|
$ 47,000 |
Required:
Compute Paisley Company’s free cash flow for the current year.
Hel-----------lo -----------Sir-----------/Ma-----------dam-----------Tha-----------nk -----------You----------- fo-----------r u-----------sin-----------g o-----------ur -----------web-----------sit-----------e a-----------nd -----------and----------- ac-----------qui-----------sit-----------ion----------- of----------- my----------- po-----------ste-----------d s-----------olu-----------tio-----------n.P-----------lea-----------se -----------pin-----------g m-----------e o-----------n c-----------hat----------- I -----------am -----------onl-----------ine----------- or----------- in-----------box----------- me----------- a -----------mes-----------sag-----------e I----------- wi-----------ll