Meagan Enterprises reported the following information for the past year of operations: For each transaction, indicate whether the ratio will (I) increase, (D) decrease, or (N) have no effect. Transaction Free Cash Flow $400,000 Operating-Cash-Flow-to- Current Liabilities Ratio 1.1 times Operating-Cash-Flow-to- Capital Expenditures Ratio 5.0 times a. Recorded credit sales of $17,000 b. Collected $6,000 owed from customers c. Purchased $50,000 of equipment on long-term credit d. Purchased $70,000 of equipment for cash e. Paid $17,000 of wages with cash f. Recorded utility bill of $14,750 that has not been paid
Meagan Enterprises reported the following information for the past year of operations: For each transaction, indicate whether the ratio will (I) increase, (D) decrease, or (N) have no effect. Transaction Free Cash Flow $400,000 Operating-Cash-Flow-to- Current Liabilities Ratio 1.1 times Operating-Cash-Flow-to- Capital Expenditures Ratio 5.0 times a. Recorded credit sales of $17,000 b. Collected $6,000 owed from customers c. Purchased $50,000 of equipment on long-term credit d. Purchased $70,000 of equipment for cash e. Paid $17,000 of wages with cash f. Recorded utility bill of $14,750 that has not been paid
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Analyzing
Meagan Enterprises reported the following information for the past year of operations:
For each transaction, indicate whether the ratio will (I) increase, (D) decrease, or (N) have no effect.
Transaction |
Cash Flow $400,000 |
Operating-Cash-Flow-to- 1.1 times |
Operating-Cash-Flow-to- Capital Expenditures Ratio 5.0 times |
|---|---|---|---|
| a. Recorded credit sales of $17,000 | |||
| b. Collected $6,000 owed from customers | |||
| c. Purchased $50,000 of equipment on long-term credit | |||
| d. Purchased $70,000 of equipment for cash | |||
| e. Paid $17,000 of wages with cash | |||
| f. Recorded utility bill of $14,750 that has not been paid |
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