Comparative financial statement data for Carmono Company follow:

This Year Last Year

Assets

Cash and cash equivalents $ 12.50 $ 24.00

Accounts receivable 70.00 63.00

Inventory 117.50 105.20

Total current assets 200.00 192.20

Property, plant, and equipment 261.00 214.00

Less accumulated depreciation 53.60 40.20

Net property, plant, and equipment 207.40 173.80

Total assets $ 407.40 $ 366.00

Liabilities and Stockholders' Equity

Accounts payable $ 70.50 $ 56.00

Common stock 158.00 121.00

Retained earnings 178.90 189.00

Total liabilities and stockholders' equity $ 407.40 $ 366.00

For this year, the company reported net income as follows:

Sales $ 1,350.00

Cost of goods sold 810.00

Gross margin 540.00

Selling and administrative expenses 520.00

Net income $ 20.00

This year Carmono declared and paid a cash dividend. There were no sales of property, plant, and equipment during this year. The company did not repurchase any of its own stock this year.

Required:

1. Using the indirect method, prepar a statement of cash flows for this year.

2. Compute Carmono's free cash flow for this year.