Practice Exercise 2 Information for two companies in the same industry, Sage Hil

Question

Practice Exercise 2 Information for two companies in the same industry, Sage Hill Inc. and Sunland Company, is presented here Sage Hil Inc Sunland Company Net cash provided by operating activities Average current liabilities Net income Capital expenditures Dividends paid $ 83,130 52,600 201,100 38,150 5,000 $95,900 92,000 201,100 74,550 10,880 Compute free cash flow for both companies and compare. (Show amounts that decrease cash flow with either a -sign e.g. -15,000 or in parenthesis e.g. (15,000).) Sage Hill Inc. Sunland Compan Free cash flow 's free cash flow is better

Explanation / Answer

Free cash flow = Net cash provided by operating activities-Capital expenditures-Dividends paid Sage hill Inc. 39980 =83130-38150-5000 Sunland company 10470 =95900-74550-10880 Sage hill Inc.'s free cash flow is better

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