McMahon inc. reported the following on the company’s statement of cash flows in
ID: 2530987 • Letter: M
Question
McMahon inc. reported the following on the company’s statement of cash flows in 2016 and 2015. Net cash flow from operating activities $294,000. 280,000 Net cash flow used for investing activities (224,000. 252,000 Net cash flow used for financing activities (63,000. (42,000) Seventy percent on the net cash flow used for investing activities was used to replace existing capacity capacity A. Determine McMahon’s free cash flow for both years 2016 2015 B. Has McMahon’s free cash flow improved or declined from 2015 to 2016? McMahon inc. reported the following on the company’s statement of cash flows in 2016 and 2015. Net cash flow from operating activities $294,000. 280,000 Net cash flow used for investing activities (224,000. 252,000 Net cash flow used for financing activities (63,000. (42,000) Seventy percent on the net cash flow used for investing activities was used to replace existing capacity capacity A. Determine McMahon’s free cash flow for both years 2016 2015 B. Has McMahon’s free cash flow improved or declined from 2015 to 2016? Net cash flow from operating activities $294,000. 280,000 Net cash flow used for investing activities (224,000. 252,000 Net cash flow used for financing activities (63,000. (42,000) Seventy percent on the net cash flow used for investing activities was used to replace existing capacity capacity A. Determine McMahon’s free cash flow for both years 2016 2015 B. Has McMahon’s free cash flow improved or declined from 2015 to 2016?Explanation / Answer
Answer A. Free Cash Flow = Opearating Cash Flow - Capital Expenditure 2016 2015 Net Cash Flow flow from Operating Activities (A) 294,000.00 280,000.00 Net Cash Flow flow from Investing Activities (B) (224,000.00) (252,000.00) Capital Expenditure - (C= 75% X B) (168,000.00) (189,000.00) Cash Flow (D = A - C) 126,000.00 91,000.00 Answer B. Improved