If net cash flows from operating activities total $115,000, purchases of plant assets total $30,000, dividends total $12,000, and sales of plant assets total $17,000, the free cash flow equals
A) $90,000.
B) $174,000.
C) $116,000.
D) $56,000.

Question

Quizplus · Accepted Answer

Free cash flow is calculated as net cash flows from operating activities minus capital expenditures (purchases of plant assets) and dividends. So, $115,000 - $30,000 - $12,000 = $73,000. However, sales of plant assets do not affect free cash flow calculation.

If Net Cash Flows from Operating Activities Total $115,000, Purchases