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:

Required:

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

Apex Company
Statement of Cash Flows—Indirect Method Operating activities: Net income $ 40,100 Adjustments to convert net income to cash basis: Depreciation $ 21,300 Increase in accounts receivable (61,600 ) Increase in inventory (26,900 ) Decrease in prepaid expenses 10,800 Increase in accounts payable 55,000 Decrease in accrued liabilities (10,900 ) Increase in income taxes payable 4,200 (8,100 ) Net cash provided by (used in) operating activities 32,000 Investing activities: Proceeds from the sale of equipment 14,200 Loan to Thomas Company (40,300 ) Additions to plant and equipment (121,300 ) Net cash provided by (used in) investing activities (147,400 ) Financing activities: Increase in bonds payable 89,500 Increase in common stock 38,800 Cash dividends (29,000 ) Net cash provided by (used in) financing activities 99,300 Net decrease in cash and cash equivalents (16,100 ) Beginning cash and cash equivalents 27,700 Ending cash and cash equivalents $ 11,600

Explanation / Answer

Net Cash provided by Operating Activities = $32,000
Capital Expenditures = $121,300
Dividends = $29,000

Free Cash Flow = Net Cash provided by Operating Activities - Capital Expenditures – Dividends
Free Cash Flow = $32,000 - $121,300 - $29,000
Free Cash Flow = -$118,300

Free cash flow for the current year is -$118,300

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