I need help on this problem.   Pearce Enterprises reported the following information for the past year of operation: Transaction Free Cash Flow $250,000 Operating-cash-flow-to-current-liabilities raition 1.0 times Operating-cash-flow-to-capital-expenditures ratio 3.0 times a) Recorded credit sales of $9,000       b) Collected $4,000owed from customers       c) Purchased $28,000 of equipment on long-term credit       d) Purchased $16,000 of equipment for cash       e) Paid $10,000 of wages with cash       f) Recorded utility bill of $1,750 that has not been paid       For each transaction, indicate whether the ratio will (I) Increase, (D) decrease, or (N) have no effect.

Question

I need help on this problem.

 

Pearce Enterprises reported the following information for the past year of operation:

Transaction

Free Cash Flow

$250,000

Operating-cash-flow-to-current-liabilities raition

1.0 times

Operating-cash-flow-to-capital-expenditures ratio

3.0 times

a) Recorded credit sales of $9,000

     
b) Collected $4,000owed from customers      
c) Purchased $28,000 of equipment on long-term credit      
d) Purchased $16,000 of equipment for cash      
e) Paid $10,000 of wages with cash      
f) Recorded utility bill of $1,750 that has not been paid      

For each transaction, indicate whether the ratio will (I) Increase, (D) decrease, or (N) have no effect.

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Cash Flow Statements

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