Exercise 12-6 Prepare a Statement of Cash Flows; Free Cash Flow [LO12-1, LO12-2,

Question

Exercise 12-6 Prepare a Statement of Cash Flows; Free Cash Flow [LO12-1, LO12-2, LO12-3] Comparative financial statement data for Carmono Company follow This Year Last Year Assets Cash Accounts receivable Inventory 10.00 $ 19.00 60.00 53.00 05.00 92.20 Total current assets 175.00 164.20 Property, plant, and equipment 246.00 204.00 49.60 37.20 Less accumulated depreciation Net property, plant, and equipment 196.40 166.80 Total assets $ 371.40 $331.00 Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings S 63.00 51.00 138.00 106.00 170.40 174.00 Total liabilities and stockholders' equity $371.40 $331.00

Explanation / Answer

Carmano company

Statement of cash flows

2)Free cash flow (FCF) is a measure of a company's financial performance,calculated as operating cash flow minus capital expenditures. FCF represents the cash that a company is able to generate after spending the money required to maintain or expand its asset base.

Operating activities: Net Income 20 Adjustments to convert Net income to cash basis: (+)Depreciation 12.4 (-)Increase in stock 7 (-)Increase in inventory 12.8 (+)Increase in Accounts payable 12 (-) Decrease in retained earnings 3.6 Net cash flow from operating activities +1 Investing activities: (-)Purchase of PPE 42 Net cash flow from Investing activities -42 Financing activities: Increase in common stock 32 Net cash flow from Financing activities +32 Net decrease in cash -9 (+)Cash balance at the begining 19 Net cash balance at the end 10

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