Free cash flow
Burkenfelt Inc., reported the following on the company’s statement of cash flows in 2012 and 2011:
|
2012 |
2011 |
|
|
Net cash flow from operating activities |
$340,000 |
$325,000 |
|
Net cash flow used for investing activities |
(305,000) |
(270,000) |
|
Net cash flow used for financing activities |
(30,000) |
(42,000) |
Seventy percent of the cash flow used for investing activities was used to replace existing capacity.
a. Determine Burkenfelt’s free cash flow.
b. Has Burkenfelt’s free cash flow improved or declined from 2011 to 2012?