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For the year ending December​ 31, 2017, Rodgers Electric expects net cash provided by operations of $ 327 comma 000​, net cash used by investing activities of $ 139 comma 000​, and net cash provided by financing activities of $ 47 comma 000. Rodgers plans to spend $ 253 comma 000 to add a warehouse for its operations and pays $ 35 comma 000 in cash dividends. What is the amount of free cash​ flow?

Respuesta :

mchaid015

Answer:

$188,000

Explanation:

Free cash flow is computed by deducting capital expenditure (basically the investing activities net cash flow) from operating cash flow. Thus, $327,000 - $139,000 = $188,000 is the free cash flow of the company.

Roger’s plan to spend $253,000 for warehouse and pay cash dividends in the amount of $35,000 are both investing activities. But we don’t consider it in our computation because there is NO ACTUAL outflow of cash yet.