Free cash flow
Totson Inc., reported the following on the company’s statement of cash flows in 2012 and 2011:
|
2012 |
2011 |
|
|
Net cash flow from operating activities |
$210,000 |
$200,000 |
|
Net cash flow used for investing activities |
(160,000) |
(180,000) |
|
Net cash flow used for financing activities |
(45,000) |
(30,000) |
Eighty percent of the cash flow used for investing activities was used to replace existing capacity.
a. Determine Totson’s free cash flow.
b. Has Totson’s free cash flow inproved or decline from 2011 to 2012?