Free Cash Flow

Burkhalter Inc. reported the following on the company's statement of cash flows in Year 2 and Year 1:

	Year 2		Year 1
Net cash flows from operating activities	$385,000		$367,000
Net cash flows used for investing activities	(293,000)		(330,000)
Net cash flows used for financing activities	(83,000)		(55,000)

Seventy percent of the net cash flows used for investing activities was used to replace existing capacity.

a. Determine Burkhalter's free cash flow for both years.

Year 2	$fill in the blank 1
Year 1	$fill in the blank 2

b. Has Burkhalter's free cash flow improved or declined from Year 1 to Year 2?

DeclinedImprovedNo effect