Accounting 26th Edition by Carl Warren,James Reeve,Jonathan Duchac

Exercise 42

Free cash flow
McMahon Inc. reported the following on the company's statement of cash flows in 2016 and 2015:

Seventy percent of the net cash flow used for investing activities was used to replace existing capacity.
a. Determine McMahon's free cash flow for both years.
b. Has McMahon's free cash flow improved or declined from 2015 to 2016
Free cash flow
Dillin Inc. reported the following on the company's statement of cash flows in 2016 and 2015:

Eighty percent of the net cash flow used for investing activities was used to replace existing capacity.
a. Determine Dillin's free cash flow for both years.
b. Has Dillin's free cash flow improved or declined from 2015 to 2016