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: Apex Company Statement of Cash Flows—Indirect Method Operating activities: Net income $ 41,400 Adjustments to convert net income to cash basis: Depreciation $ 21,500 Increase in accounts receivable (61,200) Increase in inventory (26,100) Decrease in prepaid expenses 9,200 Increase in accounts payable 54,700 Decrease in accrued liabilities (11,700) Increase in income taxes payable 4,700 (8,900) Net cash provided by operating activities 32,500 Investing activities: Proceeds from the sale of equipment 15,500 Loan to Thomas Company (40,200) Additions to plant and equipment (121,500) Net cash used for investing activities (146,200) Financing activities: Increase in bonds payable 89,200 Increase in common stock 39,600 Cash dividends (28,500) Net cash provided by financing activities 100,300 Net decrease in cash (13,400) Beginning cash balance 27,400 Ending cash balance $ 14,000 Required: Compute Apex Company’s free cash flow for the current year.

Explanation / Answer

Free Cash flow = Cash flow from operating activities - Capital Expenditure

= 32,500 - Addition to plant & equipment

= 32,500 - 121,500

= (89,000)

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