After years of negative free cash flow, General Electric reported a po

QUESTION

After years of negative free cash flow, General Electric reported a positive free cash flow of $7,386 million in 2003. Look back at GEs cash flows displayed in Exhibit 4.2. Would you interpret the 2003 free cash flow as good news?
After a string of negative free cash flow in the Fiscal Year of 2003 it generated a positive cash flow of $7386 million. Free cash flows are generated when capital expenditures (in the form if investing activities) are deducted from the operational activities. Now in the past 2 years it can be seen that although operational activities were in the same range as that of 2003 but in the investing region excess funds were spent in acquiring businesses

and buying fixed assets. In the same breath it has to be said that a positive balance did surfaced in the other investing activities which made the free cash flow changes its pattern from a negative balance to a positive one. In the fiscal 2003 this positive free cash flow is definitely a good news.

ANSWER:

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