Obermeyer Corporation issued the following statement of cash flows for 2019. (a) Compute free cash flow for
Question:
(a) Compute free cash flow for Obermeyer Corporation.
(b) Explain why free cash flow often provides better information than "Net cash provided by operating activities."
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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OBERMEYER CORPORATION Statement of Cash Flows-Indirect Method For the Year Ended December 31, 2019 Cash flows from operating activities $59,000 Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense Loss on disposal of plant assets Increase in inventory Decrease in accounts receivable Decrease in accounts payable $9,100 9,500 (5,000) 3,300 (2,200) 14,700 73,700 Net cash provided by operating activities Cash flows from investing activities Sale of investments Purchase of equipment 3,100 (27,000) Net cash used by investing activities (23,900) Cash flows from financing activities Issuance of stock Payment on long-term note payable Payment for dividends 20,000 (10,000) (15,000) Net cash used by financing activities Net increase in cash Cash at beginning of year Cash at end of year (5,000) 44,800 13,000 $57,800
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a Free cash flow 73700 27000 15000 31700 b Cash provided by operating activiti...View the full answer
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Related Book For
Financial Accounting
ISBN: 978-1119305736
10th edition
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel
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