Matlock Company Statement of Cash Flows for the Year Ended December 31, 2010 (amount in thousands)

Cash flows from operating activities
Net Income			$1,500
Depreciation expense		$210
Decrease in accounts receivable		320
Increase in inventory		-70
Increase in prepaid rent		-10
Increase in accounts payable		150	600
Net cash provided by operating activities			$2,100
Cash flows from investing activites:
Purchase of equipment		$1,000
Proceeds from sale of old equipment		200
Net cash used by investing activites			-800
Cash flows from financing activites:
Repayment of long-term mortgage		-1350
Proceeds from sale of common stock		500
Payment of cash dividends		-200
Net cash used by financing activites			-1050
Net increase in cash during 2010			$250
Cash balance, January 1, 2010			346
Cash balance, December 31, 2010			$596
Requirements:
1. How did Matlock CO. use the majority of its cash during 2010?
2. What information does this give you about the Matlock Co.?
3. What was Matlock CO's major source of cash during 2010?
4. Is this an appropriate source of cash for the long run? Explain
5. Calculate Matlock's free cash flow for 2010.