A recent income statement for Rainier Printing is shown next. Net sales ......................................... $10,000 Cost of sales

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A recent income statement for Rainier Printing is shown next.

Net sales .........................................  $10,000
Cost of sales ...................................       6,500
Gross profit ....................................       3,500
Operating expense .......................       1,200
Depreciation expense ...................         600
Operating income .........................      1,700
Interest expense ...........................         300
Income before tax ........................      1,400
Tax ..................................................        420
Income after tax ...........................     $ 980

Calculate Rainier’s free cash flow in this year, assuming it spent $630 on new capital equipment and increased current assets net of non-interest bearing current liabilities by $450.

Free Cash Flow
Free cash flow (FCF) represents the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets. Unlike earnings or net income, free cash flow is a measure of profitability that excludes the...
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