Question

Suppose that Marigold Corp. produced and sold 4800 laptop computers during 2022. It reported $101400 cash provided by operating activities. In order to maintain production at 4800 laptops, Marigold invested in $6710 in equipment. Marigold paid $1090 in dividends. What is Marigold's free cash flow?



$108400

$93600

$109200

$101400

Answer 1

Answer:

$93600

Step-by-step explanation:

Every Free Cash Flow Statement is composed of the variation of three activities:

Operating activities

Investment activities and

Financial activities

So when it says it reported $101400 by operating activities, we know it is cash that enters to the firm.

Similarly, when it says Marigold invested $6710, we know it is cash spent by the firm (-$6710), and finally $1090 were paid in dividends(-$1090). Paying dividends is considered to be a financial activity. (Which means those dollars were spent as well as the dollars invested)

Operating activities +$101400

Investment activities -$6710

Financial activities -$1090

________________________

Free Cash Flow $93600