Omnicron Inc. reported the following on the company’s cash flow statement in 20Y8 and 20Y7: 20Y8 20Y7 Net cash flow from operating activities $ 140,000 $120,000 Net cash flow used for investing activities (120,000) (80,000) Net cash flow used for financing activities (20,000) (32,000) Seventy-five percent of the net cash flow used for investing activities was used to replace existing capacity. a. Determine Omnicron’s free cash flow. b. Has Omnicron’s free cash flow improved or declined from 20Y7 to 20Y8?

a. 20Y8 20Y7 Net cash flow from operating activities $140,000 $120,000 Investments in fixed assets to maintain current production [latex]\underline{(90,000)^{1} } [/latex] [latex]\underline{(60,000)^{2} } [/latex] Free cash flow [latex]\underline{\underline{\$ 50,000} } [/latex] [latex]\underline{\underline{\$ 60,000} } [/latex] [latex]^{1}\$120,000 × 75\% [/latex] [latex]^{2}\$80,000 × 75\%[/latex] b. The change from $60,000 to $50,000 indicates an unfavorable trend.

Question 16.8: Free Cash Flow Omnicron Inc. reported the following on the c...

Financial Accounting

Omnicron Inc. reported the following on the company’s cash flow statement in 20Y8 and 20Y7:

	20Y8	20Y7
Net cash flow from operating activities	$ 140,000	$120,000
Net cash flow used for investing activities	(120,000)	(80,000)
Net cash flow used for financing activities	(20,000)	(32,000)

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

a. Determine Omnicron’s free cash flow.

b. Has Omnicron’s free cash flow improved or declined from 20Y7 to 20Y8?

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