Exercise 14-6 Prepare a Statement of Cash Flows; Free Cash Flow [LO14-1, LO14-2, LO14-3]

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.

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.

Required 1 Required 2 Using the indirect method, prepare a statement of cash flows for this year. (List any deduction in cash and cash negative amounts. Round your intermediate calculations and final answers to 2 decimal places.) Carmono Company Statement of Cash Flows For This Year Ended December 31 Operating activities: Investing activities: Financing activities: Beginning cash and cash equivalents Ending cash and cash equivalents Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute Carmono's free cash flow for this year. (Negative amount should be indicated by a minus sign. Round intermediate calculations and final answer to 2 decimal places.) Free cash flow