Ask Question
BusinessBusiness
29 May, 00:39

The following financial information is taken from the annual reports of the Jackson Company and the Pearce Company: Jackson Pearce Cash flow from operating activities $500,000 $1,500,000 Cash investment in property & equipment 150,000 480,0001. Calculate the free cash flow for each company. 2. Which firm has better cash flow health? Jackson / Pearce

+1
Answers (1)
  1. 29 May, 01:00
    0
    1. Jackson = $350,000 and Pearce = $1,020,000

    2. Pearce

    Explanation:

    The formula to compute the free cash flow is shown below:

    = EBIT * (1 - Tax Rate) + Depreciation & Amortization - Change in Net Working Capital - net capital Expenditure

    But for this question, the formula would be

    = Cash flow from operating activities - Cash investment in property & equipment

    1. For Jackson, it would be

    = $500,000 - $150,000

    = $350,000

    For Pearce, it would be

    = $1,500,000 - $480,000

    = $1,020,000

    2. If we see and compare the free cash flow, the Pearce has better cash flow due to the high cash flow from operating activities
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “The following financial information is taken from the annual reports of the Jackson Company and the Pearce Company: Jackson Pearce Cash ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
A manager tells her production employees, "It's no longer good enough that your work falls anywhere within the specification limits. I need your work to be as close to the target value as possible." Her thinking is reflective of: A.
Answers (1)
which of the following is not an example of macroeconomics A constructing a city sewer system B tightening the family budget C cutting state income taxes D subsidizing corn farms
Answers (1)
An industry in which the firm's cost structures do not vary with changes in production will have a long-run supply curve that rev: 06_26_2018 Multiple Choice is perfectly elastic. is perfectly inelastic. slopes downward. slopes upward.
Answers (1)
Your company has been running several small applications in Oracle Cloud Infrastructure and is planning a proof-of-concept (POC) to deploy PeopleSoft.
Answers (1)
Once the court has decided a case and the appeals process is over, there can be no new lawsuit on the same subject between the same two parties. this is referred to as
Answers (1)
New Questions in Business
Silver Trading Corp. recorded a net income of $200,000 for the year 2021. For the same period, the company purchased land for $150,000. It sold some of its long term investments for $50,000 during the period.
Answers (1)
What is the term that refers to a form of wealth that can be stored for the future?
Answers (1)
NewLinePhone Corp. is very risky, with a beta equal to 2.8 and a standard deviation of returns of 32%. The risk-free rate of return is 3% and the return on the market is 11%. NewLinePhone's marginal tax rate is 35%.
Answers (1)
Which of the following is a drawback of setting pay rates based strictly on a pay policy line? A. It increases the administrative burden of managing the compensation system. B. Employees have difficulty interpreting regression analysis. C.
Answers (1)
Long-lived assets are: a) non-operating assets expected to yield their economic benefits (or service potential) over a period longer than one year.
Answers (1)
Home » Business » The following financial information is taken from the annual reports of the Jackson Company and the Pearce Company: Jackson Pearce Cash flow from operating activities $500,000 $1,500,000 Cash investment in property & equipment 150,000 480,0001.
Sign Up Forgot Password?