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14 September, 09:39

During 2017, Kingbird, Inc. reported cash provided by operations of $905000, cash used in investing of $782000, and cash used in financing of $217000. In addition, cash spent for fixed assets during the period was $315000. Average current liabilities were $741000 and average total liabilities were $1956000. No dividends were paid. Based on this information, what was Kingbird free cash flow?

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  1. 14 September, 09:57
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    Kingbird's free cash flow is $590,000

    Explanation:

    Given:

    Cash from operations = $905,000

    Cash spent on fixed assets = $315,000

    Cash used in investing activities = ($782,000)

    Cash used in financing activities = ($217,000)

    Free cash flow = Cash from operations - capital expenditures

    Capital expenditures are expenditure incurred on acquiring long term assets. Cash spent on fixed assets is capital expenditure.

    Substitute the values in the above formula:

    Free cash flow = 905,000 - 315,000

    = $590,000
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