Burkhalter Inc. reported the following on the company’s statement of cash flows in Year 2 and Year 1:

Seventy percent of the net cash flows used for investing activities was used to replace existing capacity.

a. Determine Burkhalter’s free cash flow for both years.
b. Has Burkhalter’s free cash flow improved or declined from Year 1 to Year 2?

Transcribed Image Text:

Year 2 Year 1 Net cash flows from operating activities Net cash flows used for investing activities Net cash flows used for financing activities $ 385,000 (293,000) $ 367,000 (330,000) (83,000) (55,000)