During 2025, Pina Industries reported cash provided by operations of $873000, cash used in investing of $755000, and cash used in financing of $209000. In addition, cash spent on plant assets during the period was $304000. Average current liabilities were $715000 and average total liabilities were $1888000. No dividends were paid. Based on this information, what was Pina's free cash flow?

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anthougo anthougo · Answer 1 · 2022-08-23T19:58:11+02:00

Based on this information, Pina Industries' free cash flow is $569,000.

Free cash flow is the financial metric that indicates Pina Industries' financial health and desirability to investors.

The Free Cash Flow is the net cash Pina Industries generates after paying for operating expenses and capital expenditures.

The formula for computing the Free Cash Flow (FCF) is FCF = Cash from Operations – Capital Expenditure.

Cash provided by operations = $873,000

Capital Expenditure = $304,000

Free cash flow = $569,000 ($873,000 - $304,000)

Cash used in investing = $755,000

Cash used in financing = $209,000

Average current liabilities = $715,000

Average total liabilities = $1,888,000

Thus, Pina Industries' free cash flow is $569,000.

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