Question: The following summarizes free cash flows generated by General Electric from 2000-2004 (in millions of dollars). a. Explain why such a profitable firm as General

The following summarizes free cash flows generated by General Electric from 2000-2004 (in millions of dollars).

a. Explain why such a profitable firm as General Electric can have negative free cash flow.
b. In 2005, the firm announced that the years of building its set of businesses was "largely behind it," so it would be slowing its investment activity. What is the likely effect on free cash flow? How will GE's financing activities likely change? What are the alternative financing alternatives in light of the changed free cashflow?

2000 2001 2002 2003 2004 Cash from operations 30,009 39,398 34,843 36.102 36,484 37,699 40,308 61,227 21,843 38,414 7,690 (910 (26,379) 14,259 (1,930) Cash investments Free cash flow

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