Question

For the year ending December​ 31, 2018, Sparks Electric expects net cash provided by operations of ​, net cash used by investing activities of ​, and net cash provided by financing activities of . Sparks plans to spend to add a warehouse for its operations and pays in cash dividends. What is the amount of free cash​ flow?

Answer 1

Answer: C) $40,000

Step-by-step explanation:

The free cash flow to a company is that amount of cash that it has generated from its operations that it can therefore use to purchase assets and pay off dividends.

Cash from operations = $328,000

Dividends = $31,000

Spending on warehouse (asset) = $257,000

Free cash flow = 328,000 - 257,000 - 31,000

= $40,000