Question

Pilgrim Corporation reports the following on its financial statements. Cash paid for new equipment, $35,000 Cash collected from customers, $120,000 Paid a note payable, $10,000 Cash collected in exchange for issuing additional shares of Pilgrim stock to stockholders, $15,000 Cash dividends paid, $5,000 The company reports $75,000 of net income for the year and it has $80,000 of cash at year-end. What is the company’s free cash flow? Group of answer choices $15,000 $5,000 $35,000 $45,000 $80,000

Answer 1

Net free cash flow: = $80,000

Step-by-step explanation:

As for the provided information:

Cash generated during the year

Less: Ending cash balance

= Cash flow of the year

For this:

Cash paid for purchase of new equipment = - $35,000

Cash collected from customers = $120,000

Paid for outstanding note payable = - $10,000

Cash collected for issue of stock = $15,000

Cash dividends paid = - $5,000

Net income = $75,000

Closing balance of cash = - $80,000

Net free cash flow: = $80,000