
a.
Free cash flow is defined as an evaluation of financial performance of a company. It shows the cash which is generated after paying on capital expenditures. Such cash is used for production, expansion, development of new products, and acquisitions.
The following formula is used to calculate free cash flow.
To Determine: M’s free cash flow for both years.
b.
To Explain: Whether free cash flow has improved or declined from Year 1 to Year 2.

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Chapter 16 Solutions
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