Explain how to calculate free cash flow

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Problem - This is a 2-part problem.

Part A - Please indicate which section of the statement of cash flows should contain each of the following items, and whether each item would result in an inflow or outflow of cash. The sections are Operating, Investing, and Financing.

(a) Sold a building at book value

(b) Decrease in inventory

(c) Purchased land with cash

(d) Depreciation of property, plant, and equipment

(e) Issuance of common stock

Part B - Please explain how to calculate free cash flow, and also explain why some investors have more faith in investing based on free cash flow rather than reported net income.

Reference no: EM132456544

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