Cleancarpet Vacuums sells vacuum accessories. At the end of 2018, the statement of cash flows below was prepared.

Cleancarpet Vacuums
Statement of cash flows
For the Year Ended December 31, 2018
Cash Flow from Operating Activities
Net Income	$83,800
Adjustments to Reconcile Net Income to Net Cash
Provided (used) by Operating Activities
Depreciation Expense	4,760
Gain on Sale of Equipment	(7,200)
Change in Operating Assets and Liabilities
Decrease in Accounts Receivable	2,210
Increase in Merchandise Inventory	(46,800)
Increase in Accounts Payable	6,000
Net Cash Provided (used) by Operating Activities		$42,770
Cash Flow from Investing Activities
Sale of Equipment	20,300
Net Cash Provided (used) by Investing Activities		20,300
Cash flow from Financing Activities
Payment of Notes Payable	(19,100)
Payment of Cash Dividend	(23,700)
Net Cash Provided (Used) by Financing Activities		(42,800)
Net Increase (decrease) in Cash		20,270
Cash at the Beginning of the Year		68,300
Cash at the End of the Year		$88,570

1. How much of the companys cash is from day-to-day operations?

2. Why does the company have positive cash flow from investing activities? Would such positive cash flow from investing activities be sustainable?

3. Calculate Cleancarpet Vacuums free cash flow in 2018.

Analysis

What could Cleancarpet Vacuums do if selling the equipment was not an action the company could take, yet it still wanted to have a positive net cash flow at the end of the year?