Question

A company reported $50,000 net cash provided by operating activities. It invested $1,000 in equipment and paid $1,000 in dividends. Its free cash flow was _______.

Answer 1

Answer:

$48,000

Explanation:

The computation of the free cash flow is shown below:

= Net cash provided by operating activities - invested amount in equipment - cash dividend paid

= $50,000 - $1,000 - $1,000

= $48,000

To find out the free cash flow we simply deduct the equipment amount and the cash dividend from the net cash provided by operating activities