Calculate and analyze free cash flow.

Brief Exercise 13-11

The management of Morrow Inc. is trying to decide whether it can increase its dividend. During the current year, it reported net income of $875,000. It had net cash provided by operating activities of $734,000, paid cash dividends of $70,000, and had capital expenditures of $280,000. Compute the company’s free cash flow, and discuss whether an increase in the dividend appears warranted. What other factors should be considered?