Bottling Works Systems currently reported $18,550 of sales, $16,500 of operating costs other than depreciation, and $800 of depreciation. The company had no amortization charges, it had $10,200 of outstanding bonds which carry a 6% interest rate, and its federal- plus state income tax rate was 30%. In order to maintain its operations and thus make sales and cash flows in the future, the firm was needed to make $12,250 of capital expenditures on new fixed assets and to invest $1400 in net operating working capital.
By how much did the firm's net income exceeded its free cash flow?
As an investor would you prefer to look at the free cash flow number or the Net Income ?
WHY?