Comparative financial statement data for Carmono Company follow: This year Carmo

Question

Comparative financial statement data for Carmono Company follow:

This year Carmono declared and paid a cash dividend. There were no sales of property, plant, and equipment during this year. The company did not repurchase any of its own stock this year.

Using the indirect method, prepare a statement of cash flows for this year. (List any deduction in cash and cash outflows as negative amounts. Round your intermediate calculations and final answers to 2 decimal places.)

Compute Carmono’s free cash flow for this year. (Negative amount should be indicated by a minus sign. Round your intermediate calculations and final answer to 2 decimal places.)

Comparative financial statement data for Carmono Company follow:

Explanation / Answer

1. Using the indirect method, prepare a statement of cash flows for this year.

2. Compute Carmono’s free cash flow for this year

Free cash flow = Net cash flow from operating activities-Purchase of property, Plant & equipment

                      = 30.20-49

Free cash flow = (18.80)

Cash flow from operating activities Net income 20 Adjustment to reconcile net income Depreciation 13.80 Increase account receivable (7) Increase inventory (12.10) Increase account payable 15.50 Net cash flow from operating activities 30.20 Cash flow from investing activities Purchase of property, plant & equipment (49) Net Cash flow from investing activities (49) Cash flow from Financing activities Issue common stock 39 Dividend paid (32.70) Net Cash flow from Financing activities 6.30 Net cash flow (12.50) Beginning cash 26 Ending cash 13.50

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