Exercise 13-6 (Algo) Prepare a Statement of Cash Flows; Free Cash Flow [LO13-1, LO13-2, LO13-3]

Comparative financial statement data for Carmono Company follow:

	This Year	Last Year
Assets
Cash	$ 14.50	$ 28.00
Accounts receivable	78.00	71.00
Inventory	127.50	115.60
Total current assets	220.00	214.60
Property, plant, and equipment	273.00	222.00
Less accumulated depreciation	56.80	42.60
Net property, plant, and equipment	216.20	179.40
Total assets	$ 436.20	$ 394.00
Liabilities and Stockholders Equity
Accounts payable	$ 76.50	$ 60.00
Common stock	174.00	133.00
Retained earnings	185.70	201.00
Total liabilities and stockholders equity	$ 436.20	$ 394.00

For this year, the company reported net income as follows:

Sales	$ 1,550.00
Cost of goods sold	930.00
Gross margin	620.00
Selling and administrative expenses	600.00
Net income	$ 20.00

This year Carmono declared and paid a cash dividend. There were no sales of property, plant, and equipment during this year. The company did not repurchase any of its own stock this year.

Required:

1. Using the indirect method, prepare a statement of cash flows for this year.

2. Compute Carmonos free cash flow for this year.