# The following are excerpts from Hamburg Company’s statement of cash flows and other financial records. Compute the following for the company: A. free cash flow B. cash flows to sales ratio C. cash flows to assets ratio

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### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

#### Solutions

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Section
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### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 16, Problem 16EA
Textbook Problem
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## The following are excerpts from Hamburg Company’s statement of cash flows and other financial records. Compute the following for the company:A. free cash flowB. cash flows to sales ratioC. cash flows to assets ratio

To determine

(a)

Free cash flows:

Free cash flow is generated by deducting capital expenditure and cash dividend payments from cash flow from operating activities.

Cash flow from operating activities:

The total amount of cash generated from the regular operations of a business is called cash flow from operating activities.

To calculate:

Free cash flow of Hamburg company.

### Explanation of Solution

 Company HFree Cash Flow Particulars Amount ($) Amount ($) Cash flow from operating activities 100,000
To determine

(b)

Free cash flows:

Free cash flow is generated by deducting capital expenditure and cash dividend payments from cash flow from operating activities

Sales revenue:

The total amount of cash generated by selling of goods & services is called sales revenue.

To calculate:

Cash flows to sales ratio.

To determine

(c)

Free cash flows:

Free cash flow is generated by deducting capital expenditure and cash dividend payments from cash flow from operating activities

Total assets:

Assets are referred as anything in possession of business which has an economic value, and which can benefit the business for a period of 1 or more years. Total assets are the total amount of owned asset by a business.

To calculate:

Cash flow to assets ratio.

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