Question Details

All of the following statements about free cash flow are false 



1.	Tomas Pest Control Products has the following information available:
Net Income	$25,000
Cash Provided by Operations	33,000
Cash Sales	65,000
Capital Expenditures	10,000
Dividends Paid	2,000
What is Tomas’ free cash flow?
a.	$27,000
b.	$23,000 
c.	$21,000 
d.	$10,000


	2.	During 2014, Harvey Industries reported cash provided by operations of $670,000, cash used in investing of $1,039,000, and cash used in financing of $145,000. In addition, cash spent for fixed assets during the period was $404,000. No dividends were paid. Based on this information, what was Harvey's free cash flow?
a.	($369,000)
b.	 $1,450,000
c.	 $266,000
d.	($918,000)


	3.	All of the following statements about free cash flow are false except:
a.	Significant free cash flow indicates less potential to finance new investments.
b.	Free cash flow is most commonly calculated by subtracting capital expenditures from cash provided by operations and then adding cash dividends.
c.	Free cash flow is not reported on the statement of cash flows.
d.	Significant free cash flow indicates less potential to pay additional dividends.


4.	The cost of goods sold during the year was $183,000. Merchandise inventory decreased by $8,000 during the year and accounts payable decreased by $4,000 during the year.  Using the direct method of reporting cash flows from operating activities, cash payments for 	merchandise total
a.	$187,000.
b.	$179,000.
c.	$171,000.
d.	$195,000.


	5.	Gonzo Company reports a $25,000 increase in inventory and a $12,000 decrease in accounts payable during the year. Cost of Goods Sold for the year was $185,000. Using the direct method of reporting cash flows from operating activities, cash payments made to suppliers were
a.	$185,000.
b.	$197,000.
c.	$222,000.
d.	$148,000.




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