Free Cash Flow

Sweeter Enterprises Inc. has cash flows from operating activities of $$309,000.$ Cash flows used for investments in property, plant, and equipment totaled $$62,000,$ 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 pay the interest on the loan and repay the loan principal. Sweeter's free cash flow is: $,$ which is very