2-5A. (Measuring cash flows) Calculate the free cash flows for Pamplin, Inc., for the year ended December 31, 2003, both from an asset and a financing perspective. Interpret your results.

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Pamplin, Inc., Balance Sheet at 12/31/02 and 12/31/03 ASSETS 2002 2003 Cash $ 200 $ 150 Accounts receivable 450 425 Inventory 550 625 Current assets 1,200 1,200 Plant and equipment 2,200 2,600 Less: accumulated depreciation (1,000) (1,200) Net plant and equipment 1,200 1,400 Total assets $2,400 $2,600 Accounts payable Notes payable-current (9%) LIABILITIES AND OWNERS' EQUITY 2003 $ 150 150 2002 $ 200 0 Current liabilities Long-term debt Owners' equity $ 200 $ 300 600 600 Common stock Paid-in capital $ 300 $ 300 600 600 Retained earnings 700 800 Total owners' equity Total liabilities and owners' equity $1,600 $1,700 $2,400 $2,600