10 pts) Use PAPs Companys balance sheets and income statement below to calculate its free cash flows from operations. (10 pts) How does PAP use free cash flows from operations (be specific where do the free cash flows come from or go to what are their levels?)?

PAP Inc. Balance sheet For the Period ended 2019 and 2020 ($000)
ASSETS
	2019	2020
Cash	$ 200	$ 150
Accounts receivable	450	425
Inventory	550	625
CURRENT ASSETS	$ 1,200	$ 1,200
Plant & equipment	$2,200	$2,600
Less Accumulated Depreciation	(1,000)	(1,200)
Net Plant & equipment	$1,200	$1,400
Total Assets	$2,400	$2,600
LIABILITIES & Equity
Accounts payable	$ 200	$150
Notes Payable current (9%)	0	150
CURRENT LIABILITIES	$ 200	$300
Bonds	$ 600	$600
Owners Equity
Common stock	$900	$900
Retained earnings	700	800
Total Owners Equity	$ 1,600	$1,700
Total liabilities & Equity	$2,400	$2,600

PAP Inc. Income Statements (000s)
	2019	2020
Sales	$1,200	$1,450
COGS	700	850
Gross Profit	$500	$600
Selling, general, ADM Expenses	30	40
Depreciation	220	200
Operating Income	$ 250	$ 360
Interest expense	50	64
EBT	$200	$ 296
Taxes (40 %)	80	118
Net income	$120	$178