000. No d dend. During the current year, it reported r aided by operating activi

Question

000. No d dend. During the current year, it reported r aided by operating activities of $734,000, paid cash dividends of $70,000, and had captal expenditures of $280,000. Compute the company's free cash flow, and discuss w increase in the d 3-11 The management of Morrow Inc. is trying to decide w BE1 an the dividend appears warranted. What other factors should be considered? BE13-12 Suppose Columbia Sportswear had at the beginning of a recent year, and $267 653 000 at year-end. Sales revenuuew Company had accounts receivable of $206,024000 any.

Explanation / Answer

Calculation of Free cash flow: $ Net cash from operating activities          7,34,000 Less: Payment of dividend            -70,000 Less: Capital Expenditure        -2,80,000 Free cash flow          3,84,000 Yes, Increase in the dividend is warranted, company pay to dividend to satisfy the expectation of the shareholders as per dividend growth model dividend is the deciding factor of price of the share but company should at the time of decleraing the dividend keep other factors in mind like to find out whether company have sufficient fund to meet it business plan and also to see if there is any business opprtunity available and the requirement of the fund in that opportunity however in the present case company have $ 384,000 free cash

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