On its Statement of Cash Flows,Mike's Motors reported cash flow from operating activities of $107,000,cash flow from investing activities of $88,000,and cash flow from financing activities of ($62,000).Mike's Motors invested $54,000 cash in long-term assets.Mike's Motors' free cash flow is:

Question

Quizplus · Accepted Answer

To calculate free cash flow, we need to use the following formula:

Free Cash Flow = Cash Flow from Operating Activities - Capital Expenditures

Capital Expenditures = Cash Flow from Investing Activities - Increase in Long-term Investments

Substituting the given values:

Capital Expenditures = $88,000 - $54,000 = $34,000

Free Cash Flow = $107,000 - $34,000 = $53,000

Therefore, the answer is (C) $53,000.

On Its Statement of Cash Flows,Mike's Motors Reported Cash Flow