Introduction:
A company’s free each flow represents the cash flow that a company is able to generate after considering the maintenance or expansion of its assets (Capital expenditures) and the payment of dividends. Having positive
In money related bookkeeping, a cash flow explanation, otherwise called the announcement of cash flows, is a fiscal summary that demonstrates how changes in monetary record records and salary influence cash and cash reciprocals, and separates the examination to working, investing, and financing activities.
To choose:
Compute free cash flow and the cash flow adequacy ratio. Comment on each ratio.
Trending nowThis is a popular solution!
Chapter 11 Solutions
Cornerstones of Financial Accounting
- Selected information from Brook Corporations accounting records and financial statements for 2019 follows: On the statement of cash flows for the year ended December 31, 2019, Brook should disclose a net increase in cash in the amount of: a. 1,700,000 b. 2,400,000 c. 3,700,000 d. 4,200,000arrow_forwardUse the following excerpts from Indigo Companys balance sheets to determine net cash flows from operating activities (indirect method), assuming net income for 2018 of $225,000.arrow_forwardUse the following information from Birch Companys balance sheets to determine net cash flows from operating activities (indirect method), assuming net income for 2018 of $122,000.arrow_forward
- Ratio Analysis Consider the following information taken from Chicago Water Slides (CWSs) financial statements: Also, CWSs operating cash flows were $25,658 and $29,748 in 2019 and 2018, respectively. Note: Round all answers to two decimal places. Required: 1. Calculate the current ratios for 2019 and 2018. 2. Calculate the quick ratios for 2019 and 2018. 3. Calculate the cash ratios for 2019 and 2018. 4. Calculate the operating cash flow ratios for 2019 and 2018. 5. CONCEPTUAL CONNECTION Provide some reasons why CWSs liquidity may be considered to be improving and some reasons why it may be worsening.arrow_forwardPreparing a Statement of Cash Flows Volusia Company reported the following comparative balance sheets for 2019: Required: Prepare a statement of cash flows for Volusia using the indirect method to compute net cash flow from operating activities.arrow_forwardDetermining Cash Flows from Investing Activities Burns Companys 2019 and 2018 balance sheets presented the following data for equipment: During 2019, equipment costing $41,000 with accumulated depreciation of $36,700 was sold for cash, producing a $3,200 gain. Required: 1. Calculate the amount of depreciation expense for 2019. 2. Calculate the amount of cash spent for equipment during 2019. 3. Calculate the amount that should be included as a cash inflow from the disposal of equipment.arrow_forward
- In the current year, Harrisburg Corporation had net income of 35,000, a 9,000 decrease in accounts receivable, a 7,000 increase in inventory, an 8,000 increase in salaries payable, a 13,000 decrease in accounts payable, and 10,000 in depreciation expense. Using the indirect method, prepare the operating activities section of its statement of cash flows based on this information.arrow_forwardChasse Building Supply Inc. reported net cash provided by operating activities of $243,000, capital expenditures of $112,900, cash dividends of $35,800, and average maturities of long-term debt over the next 5 years of $122,300. What is Chasses free cash flow and cash flow adequacy ratio? a. $94,300 and 0.77, respectively c. $130,100 and 1.06, respectively b. $94,300 and 0.82, respectively d. $165,900 and 1.36, respectivelyarrow_forwardUse the following information from Juniper Companys financial statements to prepare the operating activities section of the statement of cash flows (indirect method) for the year 2018.arrow_forward
- The financial statements for Romeo and Company follow. Assume that the additional investment and the withdrawals were in the form of cash. Required Prepare a statement of cash flows for the year ended December 31, 2018. Check Figure Net cash flows from operating activities, 172,000arrow_forwardUse the following excerpts from Tungsten Companys financial information to prepare a statement of cash flows (indirect method) for the year 2018.arrow_forwardUse the following excerpts from Mountain Companys financial information to prepare a statement of cash flows (indirect method) for the year 2018.arrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningCollege Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College PubIntermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeFundamentals Of Financial Management, Concise Edi...FinanceISBN:9781337902571Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage Learning