Zielinski Corporation issued the following statement of cash flows for 2012.
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Cash flows from operating activities |
$59,000 |
|
|
Net income |
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Adjustments to reconcile net income to net cash |
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provided by operating activities: |
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Depreciation expense |
$ 9,100 |
|
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Decrease in accounts receivable |
9,500 |
|
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Loss on sale of equipment |
3,300 |
|
|
Increase in inventory |
(5,000) |
|
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Decrease in accounts payable |
(2,200) |
|
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Net cash provided by operating activities |
(23,900) |
|
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Cash flows from financing activities |
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Issuance of stock |
20,000 |
|
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Payment on long term note payable |
(10,000) |
|
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Payment for dividends |
(15,000) |
|
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Net cash used by financing activities |
(5,000) |
|
|
Net increase in cash |
44,800 |
|
|
Cash at beginning of year |
13,000 |
|
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Cash at end of year |
$57,800 |
(a) Compute free cash flow for Zielinski Corporation. (b) Explain why free cash flow often provides better information than “Net cash provided by operating activities.”