During 2022, Freda's Donuts reported cash provided by operations of $735,000, cash used in investing of $1,300,000, and cash used in financing of $135,000. In addition, cash spent for fixed assets during the period was $233,000. Dividends of $28,000 were paid. Given this information, calculate Freda's free cash flow. $826,000.00 O $367,000.00 O $474,000.00 O $186,000.00

Free cash flow is calculated as Net Cash Provided by Operating Activities ($735,000) minus Capital Expenditures ($233,000) minus Cash Dividends ($28,000). Consequently, $474,000 is the free cash flow.

How Does Free Cash Flow (FCF) Work?

Free cash flow (FCF) is the money a business makes after subtracting the cash it must spend to run its business and maintain its capital assets. Or to put it another way, free cash flow is the money that remains after a business pays its operating expenses (OpEx) and capital expenditures (CapEx).

How Is Free Cash Flow Calculated (FCF)?

Since no two businesses have exactly the same financial records, there are three ways to calculate free cash flow. The result should be the same regardless of the technique utilized.

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