Please refer to Table 3-2 for the following questions.
Table 3-2
Enigma has the following financial information:

No changes were made in interest payable or taxes payable.
-A firm has after-tax cash flow from operations equal to $100,000.Operating working capital increased by $20,000,and the firm purchased $30,000 of fixed assets.The firm's free cash flow was
A) $50,000.
B) $90,000.
C) $110,000.
D) $150,000.

Question

Please refer to Table 3-2 for the following questions.
Table 3-2
Enigma has the following financial information:
  
No changes were made in interest payable or taxes payable.
-A firm has after-tax cash flow from operations equal to $100,000.Operating working capital increased by $20,000,and the firm purchased $30,000 of fixed assets.The firm's free cash flow was
A) $50,000. 
B) $90,000. 
C) $110,000. 
D) $150,000.

Quizplus · Accepted Answer

Free cash flow is calculated as after-tax cash flow from operations minus investments in operating working capital minus investments in fixed assets. Here, it's $100,000 - $20,000 - $30,000 = $50,000.

Please Refer to Table 3-2 for the Following Questions