If a company's free cash flow is $90,000,net cash flows from operating activities total $220,000,purchases of plant assets total $100,000,and sales of plant assets total zero,what amount is committed to dividends?

Question

Quizplus · Accepted Answer

Free cash flow = net cash flows from operating activities - purchases of plant assets + sales of plant assets
$90,000 = $220,000 - $100,000 + $0
Cash available for dividends = free cash flow = $90,000
Therefore, the amount committed to dividends is $30,000 (assuming the entire free cash flow is committed to dividends). The correct answer is choice B.

If a Company's Free Cash Flow Is $90,000,net Cash Flows