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Problem Solving Survival Guide to accompany Financial Accounting, 8th Edition by Donald E. Kieso, Paul D. Kimmel, Jerry J. Weygandt

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SOLUTION TO EXERCISE 13-5

Free cash flow is determined by subtracting Capital Expenditures and the Payment of Dividends from the Cash Provided by Operating Activities.

For the Year ending 12/31/2014 the free cash flow for Exxon Mobil CP was ($52.0B - $15.4B -$7.9B) = $28.7B.

For the Year ending 12/31/2013 the free cash flow for Exxon Mobil CP was ($49.3B - $15.5B -$7.9B) = $25.9B.

Exxon Mobil CP's free cash flow increased by $2.8B ($28.7B - $25.9B). The increase was due to the increase from the Cash Provided by Operating Activities since the Capital Expenditures and the Payment of Dividends essentially remained constant.

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