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Free Cash Flow

Sweeter Enterprises Inc. has net cash flows from operating activities of $$358,000.$ Cash flows used for investments in property, plant, and equipment totaled $$68,000,$ of which $70\%$ of this investment was used to replace existing capacity.

a$.$ Determine the free cash flow for Sweeter Enterprises Inc.

$

b$.$ How might a lender use free cash flow to determine whether or not to give Sweeter Enterprises Inc. a loan?

Free cash flow is often used to measure the financial strength of a business. The $$ free cash flow that a business has, the easier it will be for the company to p$$y the interest on the loan and repay the loan principal. Sweeter's free cash flow is $ $,$ which is very strong $.$

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Recall the definition of free cash flow. Is all the property, plant, and equipment used to replace existing capacity?