Chicago Corporation issued the following statement of cash flows for 2012.
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Cash flows from operating activities
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Net income
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$19,000
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Adjustments to reconcile net income to net cash
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provided by operating activities:
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Depreciation expense
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$ 8,100
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Loss on disposal of plant assets
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1,300
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Decrease in accounts receivable
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6,900
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Increase in inventory
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(4,000)
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Decrease in accounts payable
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(2,000)
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10,300
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Net cash provided by operating activities
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29,300
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Cash flows from investing activities
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Sale of investments
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1,100
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Purchase of equipment
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(19,000)
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Net cash used by investing activities
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(17,900)
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Cash flows from financing activities
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Issuance of stock
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10,000
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Payment on long-term note payable
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(5,000)
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Payment for dividends
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(9,000)
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Net cash used by financing activities
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(4,000)
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Net increase in cash
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7,400
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Cash at beginning of year
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10,000
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Cash at end of year
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$ 17,400
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(a) Compute free cash flow for Chicago Corporation. (b) Explain why free cash flow often provides better information than "Net cash provided by operating activities."