Accounting
Accounting
27th Edition
ISBN: 9781337272094
Author: WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher: Cengage Learning,
Question
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Chapter 16, Problem 16.8BPE

a.

To determine

Free cash flow:

Free cash flow is defined as an evaluation of financial performance of a company. It shows the cash which is generated after paying on capital expenditures. Such cash is used for production, expansion, development of new products, and acquisitions.

The following formula is used to calculate free cash flow.

Free cash flow = (Net cash provided by operating activitiesCash payments planned for investments in long-term assets)

To Determine: D’s free cash flow for both years.

b.

To determine

To Explain: Whether free cash flow has improved or declined from Year 1 to Year 2.

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Free cash flow Dillin Inc. reported the following on the company's statement of cash flows in 20Y2 and 20Y1: 20Y2 20Y1 Net cash flow from operating activities $476,200 $456,200 Net cash flow used for investing activities (429,000) (379,000) Net cash flow used for financing activities (41,000) (57,000) Eighty percent of the net cash flow used for investing activities was used for the purchase of property, plant, and equipment. a. Determine Dillin's free cash flow for both years. 20Y2 20Y1 Free cash flow $ b. Has Dillin's free cash flow improved or declined from 20Y1 to 20Y2?
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Chapter 16 Solutions

Accounting

Ch. 16 - Prob. 16.1APECh. 16 - Prob. 16.1BPECh. 16 - Adjustments to net incomeindirect method Ripley...Ch. 16 - Prob. 16.2BPECh. 16 - Changes in current operating assets and...Ch. 16 - Changes in current operating assets and...Ch. 16 - Prob. 16.4APECh. 16 - Prob. 16.4BPECh. 16 - Land transactions on the statement of cash flows...Ch. 16 - Land transactions on the statement of cash flows...Ch. 16 - Prob. 16.6APECh. 16 - Prob. 16.6BPECh. 16 - Cash payments for merchandisedirect method The...Ch. 16 - Cash payments for merchandisedirect method The...Ch. 16 - Prob. 16.8APECh. 16 - Prob. 16.8BPECh. 16 - Prob. 16.1EXCh. 16 - Effect of transactions on cash flows State the...Ch. 16 - Classifying cash flows Identify the type of cash...Ch. 16 - Cash flows from operating activitiesindirect...Ch. 16 - Cash flows from operating activitiesindirect...Ch. 16 - Prob. 16.6EXCh. 16 - Prob. 16.7EXCh. 16 - Determining cash payments to stockholders The...Ch. 16 - Reporting changes in equipment on statement of...Ch. 16 - Prob. 16.10EXCh. 16 - Reporting land transactions on statement of cash...Ch. 16 - Prob. 16.12EXCh. 16 - Reporting land acquisition for cash and mortgage...Ch. 16 - Reporting issuance and retirement of longterm debt...Ch. 16 - Prob. 16.15EXCh. 16 - Prob. 16.16EXCh. 16 - Prob. 16.17EXCh. 16 - Statement of cash flowsindirect method The...Ch. 16 - Prob. 16.19EXCh. 16 - Prob. 16.20EXCh. 16 - Determining selected amounts for cash flows from...Ch. 16 - Prob. 16.22EXCh. 16 - Cash flows from operating activitiesdirect method....Ch. 16 - Prob. 16.24EXCh. 16 - Free cash flow The financial statement for Nike,...Ch. 16 - Free cash flow Lovato Motors Inc. has cash flows...Ch. 16 - Statement of cash flowsindirect method The...Ch. 16 - Prob. 16.2APRCh. 16 - Statement of cash flowsindirect method The...Ch. 16 - Prob. 16.4APRCh. 16 - Prob. 16.5APRCh. 16 - Prob. 16.1BPRCh. 16 - Statement of cash flowsindirect method The...Ch. 16 - Statement of cash flowsindirect method The...Ch. 16 - Statement of cash flowsdirect method The...Ch. 16 - Statement of cash flowsdirect method applied to PR...Ch. 16 - Ethics in Action Lucas Hunter, president of...Ch. 16 - Prob. 16.3CPCh. 16 - Using the statement of cash flows You are...Ch. 16 - Dillip Lachgar is the president and majority...
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