Grinders company issued the following statement of cash flows for 2011.

(a) Compute free cash flow for Grinders Company.
(b) Explain why free cash flow often provides better information than €œNet cash provided by operatingactivities€.

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GRINDERS COMPANY Statement of Cash Flows-Indirect Method For the Year Ended December 31, 2011 Cash flows from operating activities Net incomc $59,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense Loss on sale of cquipment Decrease in accounts receivable Increase in inventory Decrease in accounts payable $9.100 3,300 9,500 (5,000) (2.200) 14,700 73.700 Net cash provided by operating activities Cash flows from investing activities Sale of investments Purchase of equipment 3,100 (27.000 Net cash used by investing activities (23.900) Cash flows from financing activities Issuance of shares Payment on long-term note payable Payment for dividends 20.000 (10.000) (15.000) (5.000) 44.800 13.000 S57.800 Net cash used by financing activities Net increase in cash Cash at begirning of year Cash at end of year