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Analyzing the Statement of Cash Flows Rollins Inc. is considering expanding its operations into different regions of the country; how-ever, this expansion will require significant cash flow as well as additional financing. Rollins reported the following information for 2019: cash provided by operating activities, $387,200; cash provided by investing activities, $108,700; average debt maturing over the next 5 years, $345,500; capital expenditures, $261,430; cash dividends, $40,000. Required: Compute free cash flow and the cash flow adequacy ratio. ( Note: Round ratio to two decimal places.) Comment on Rollins’ ability to expand its operations.

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881
BuyFind

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881

Solutions

Chapter
Section
Chapter 11, Problem 22CE
Textbook Problem

Analyzing the Statement of Cash Flows

Rollins Inc. is considering expanding its operations into different regions of the country; how-ever, this expansion will require significant cash flow as well as additional financing. Rollins reported the following information for 2019: cash provided by operating activities, $387,200; cash provided by investing activities, $108,700; average debt maturing over the next 5 years, $345,500; capital expenditures, $261,430; cash dividends, $40,000.

Required:

Compute free cash flow and the cash flow adequacy ratio. ( Note: Round ratio to two decimal places.) Comment on Rollins’ ability to expand its operations.

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Chapter 11 Solutions

Cornerstones of Financial Accounting
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