Free cash flow
Totson Inc. reported the following on the company's statement of cash flows in 2012 and 2011:
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2012
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2011
|
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Net cash fl ow from operating activities
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$ 210,000
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$ 200,000
|
|
Net cash fl ow used for investing activities
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(160,000)
|
(180,000)
|
|
Net cash fl ow used for fi nancing activities
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(45,000)
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(30,000)
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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 improved or declined from 2011 to 2012?