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Exercise 12-6 Prepare a Statement of Cash Flows; Free Cash Flow [LO12-1, LO12-2, LO12-3]

Comparative financial statement data for Carmono Company follow:

	This Year		Last Year
Assets
Cash	$	18.50	$	36.00
Accounts receivable		94.00		87.00
Inventory		147.50		136.40
Total current assets		260.00		259.40
Property, plant, and equipment		297.00		238.00
Less accumulated depreciation		63.20		47.40
Net property, plant, and equipment		233.80		190.60
Total assets	$	493.80	$	450.00
Liabilities and Stockholders Equity
Accounts payable	$	88.50	$	68.00
Common stock		206.00		157.00
Retained earnings		199.30		225.00
Total liabilities and stockholders equity	$	493.80	$	450.00

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

Sales	$	1,950.00
Cost of goods sold		1,170.00
Gross margin		780.00
Selling and administrative expenses		760.00
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. (List any deduction in cash and cash outflows as negative amounts. Round your intermediate calculations and final answers to 2 decimal places.)

Carmono Company
Statement of Cash Flows - Indirect Method
For This Year Ended December 31
Operating activities:
Adjustments to convert net income to a cash basis:
Investing activities:
Financing activities:
Beginning cash and cash equivalents
Ending cash and cash equivalents

2.	Compute Carmonos free cash flow for this year. (Negative amount should be indicated by a minus sign. Round your intermediate calculations and final answer to 2 decimal places.)

Free cash flow