Following the acquisition of Kraft during Year 8, the Philip Morris Companies released its Year 8 statement of cash flows (indirect method). PHILIP MORRIS COMPANIES, INC. Statement of Cash Flows For the Year Ended December 31, Year 8 ($ millions) Cash flows from operating activities Net income. $ 2,337 Add (deduct) adjustments to cash basis Depreciation expense 654 Amortization of goodwill 125 Decrease in accounts receivable 601 Decrease in inventories 2 Decrease in deferred taxes. (325) Increase in accounts payable. 408 Increase in accrued liabilities 1,041 Increase in income taxes payable. 362 Net cash flow from operating activities $ 5,205 Cash flows from investing activities Increase in property, plant & equipment (before depreciation). (980) Increase in goodwill (before amortization) (783) Decrease in investments 405 Acquisition of subsidiary-Kraft * (11,383) Net cash used by investing activities (12,741) Cash flows from financing activities Decrease in short-term debt. (881) Increase in long-term debt 9,929 Decrease in equity (repurchase) ** (540) Dividends declared.. (941) Increase in dividends payable. 47 Net cash provided by financing activities. 7,614 Net increase in cash. $ 78 Instructions Compute Philip Morris's free cash flow for Year 8. Discuss how free cash flow impacts the company's future earnings and financial condition