Apex Company prepared the statement of cash flows for the current year that is s

Question

Apex Company prepared the statement of cash flows for the current year that is shown below:

Compute Apex Company’s free cash flow for the current year. (Negative amount should be indicated by a minus sign.)

Free Cash Flow?

Apex Company
Statement of Cash Flows—Indirect Method   Operating activities:   Net income $ 40,500   Adjustments to convert net income to cash basis:      Depreciation $ 20,000      Increase in accounts receivable (60,800)      Increase in inventory (25,200)      Decrease in prepaid expenses 10,300      Increase in accounts payable 53,600      Decrease in accrued liabilities (11,800)      Increase in income taxes payable 4,600 (9,300)   Net cash provided by operating activities 31,200   Investing activities:   Proceeds from the sale of equipment 15,800   Loan to Thomas Company (41,600)   Additions to plant and equipment (120,700)   Net cash used for investing activities (146,500)   Financing activities:   Increase in bonds payable 88,900   Increase in common stock 39,100   Cash dividends (28,900)   Net cash provided by financing activities 99,100   Net decrease in cash (16,200)   Beginning cash balance 28,200   Ending cash balance $ 12,000

Explanation / Answer

Free cash flow = Cash provided by operations - Net cash used for capital expenditure = $ 31,200 - $ 120,700 = $ (89,500)

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