Cash Flow Ratios Spencer Company reports the following amounts in its annual financial statements: Cash flow from operating activities $80,000 Capital expenditures $52,500* Cash flow from investing activities (60,000) Average current assets 120,000 Cash flow from financing activities (7,500) Average current liabilities 90,000 Net income 37,500 Total assets 225,000 * This amount is a cash outflow a. Compute Spencer's free cash flow. b. Compute Spencer's operating- cash-flow-to-current-liabilities ratio.
Cash Flow Ratios Spencer Company reports the following amounts in its annual financial statements: Cash flow from operating activities $80,000 Capital expenditures $52,500* Cash flow from investing activities (60,000) Average current assets 120,000 Cash flow from financing activities (7,500) Average current liabilities 90,000 Net income 37,500 Total assets 225,000 * This amount is a cash outflow a. Compute Spencer's free cash flow. b. Compute Spencer's operating- cash-flow-to-current-liabilities ratio.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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H2.
Transcribed Image Text:Cash Flow Ratios Spencer Company
reports the following amounts in its
annual financial statements: Cash
flow from operating activities
$80,000 Capital expenditures
$52,500* Cash flow from investing
activities (60,000) Average current
assets 120,000 Cash flow from
financing activities (7,500) Average
current liabilities 90,000 Net income
37,500 Total assets 225,000 * This
amount is a cash outflow a.
Compute Spencer's free cash flow.
b. Compute Spencer's operating-
cash-flow-to-current-liabilities ratio.
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