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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 13-6

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

The free cash flow for the Ford Motor Co. was ($17.10B - $6.02B - $0) = $11.08B.

The free cash flow for General Motors Corp. was ($7.73B - $7.50B - $0.57B) = ($0.34B)

General Motors Corp. had a negative free cash flow for 2014 whereas Ford Motor Co. had a positive free cash flow. In fact, its free cash flow exceeded General Motor's Cash Provided by Operating Activities.

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