If the free cash flow is $60,000, sales are $200,000, and net income is $100,000, the ratio of free cash flow to sales is a. 30%. b. 60%. c. The ratio cannot be calculated from this information because cash used to purchase property, plant, and equipment is not given. d. 333%.

Question

Adonis Harrington

Business

16 July, 12:08

If the free cash flow is $60,000, sales are $200,000, and net income is $100,000, the ratio of free cash flow to sales is a. 30%. b. 60%. c. The ratio cannot be calculated from this information because cash used to purchase property, plant, and equipment is not given. d. 333%.

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Answers (1)

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Azaria Moses · Answer 1

30%

Explanation:

The ratio of free cash flow to sales can be calculated by dividing the free cash flow by the sales amount as follows:

Ratio of free cash flow to sales = $60,000 : $200,000 = 0.30, or 30%.

Therefore, the ratio of free cash flow to sales is 30%.