Q3TI - Horngren'S Financial And Managerial Accounting

Question

Question: Kalapono Company expects the following for 2018:

 • Net cash provided by operating activities of \(100,000. 

• Net cash provided by financing activities of \)10,000. 

• Net cash used for investing activities of \(20,000 (no sales of long-term assets). 

• Cash dividends paid to stockholders was \)2,000. 

How much free cash flow does Kalapono expect for 2018?

Step-by-Step Solution

Answer

Answer

 

Free cash flow expected by Kalapono is $78,000.

Step 1: Cash flow from operating activities

The planned investment in long-term assets is deducted from the net cash provided by operating activities. Here, net cash used for investing activities will be deducted from the cash provided by operating activities.

Step 2: Calculation of free cash flow Kalapono expect for 2018

Particulars		Amount($)
Net cash provided by operating activities	100,000
Cash payments planned for investments in long-term assets	(20,000)
Cash dividends	(2,000)
Free cash flow		78,000