Question

Sanchez Inc. reported the following on the company's cash flow statement for 20Y7: Net cash flow from operating activities $500,000 Net cash flow used for investing activities (200,000) Net cash flow used for financing activities 150,000 Thirty percent of the cash flow used for investing activities was used to purchase property, plant, and equipment. What is the free cash flow for 20Y7?

Answer 1

Answer: $440,000

Step-by-step explanation:

From the question, we are informed that the net cash flow from operating activities is $500,000, the net cash flow used for investing activities is (200,000) and that the net cash flow used for financing activities 150,000. We are further told that thirty percent of the cash flow used for investing activities was used to purchase property, plant, and equipment.

The free cash flow for 20Y7 will be:

= $500,000 - ($200,000 × 30%)

= $500,000 - ($200,000 × 0.3)

= $500,000 - $60,000

= $440,000