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    JacquieSue's Avatar
    JacquieSue Posts: 2, Reputation: 1
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    #1

    Apr 29, 2007, 01:14 PM
    Free Cash Flow
    Could someone check my work? I'm a bit confused because it seemed too simple.

    Based on the following, what is free cash flow?

    Cash from Operations $150,000
    Cash from Financing $30,000
    Cash from Investing $(30,000)

    Operations includes $2,000 for depreciation. Investing includes the purchase of a replacement asset for $100,000 and the sale of the one used in production, which is now obsolete, for $70,000. Financing is made up of $70,000 of borrowing and $30,000 of dividends paid.

    This is my answer.

    Cash flow from operating activities: $150,000
    Less: Investments in fixed assets to maintain current production 30,000
    Free Cash Flow $120,000
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #2

    Apr 29, 2007, 07:37 PM
    According to what I read what Free Cash Flow is all about, the answer of $120,000 would seem to be correct.
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