Calculate the operating cash flows with the use of indirect method.

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An analyst has calculated a ratio using as the numerator the sum of operating cash fl ow, interest, and taxes and as the denominator the amount of interest. What is this ratio, what does it measure, and what does it indicate? C . Th is ratio is an operating profi tability ratio, measuring the operating cash fl ow generated accounting for taxes and interest and indicating a company’s liquidity.

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Chapter 14, Problem 19BEA

To determine

Calculate the operating cash flows with the use of indirect method.

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An analyst has calculated a ratio using as the numerator the sum of operating cash fl ow, interest, and taxes and as the denominator the amount of interest. What is this ratio, what does it measure, and what does it indicate? C . Th is ratio is an operating profi tability ratio, measuring the operating cash fl ow generated accounting for taxes and interest and indicating a company’s liquidity.

Prepare a statement of cash flows using the indirect method. Compute free cash flow.

abels and Amount Descriptions Instructions Labels Dec. 31, Dec. 31, December 31, 20Y3 20Y3 20Y2 For the Year Ended December 31, 20Y3 Amount Descriptions Assets 3 Cash $625,680.00 $586,230.00 Cash received from sale of investments 228,100.00 208,850.00 4 Accounts receivable (net) 5 Inventories Cash paid for purchase of land Cash paid for purchase of equipment Cash received from issuing common 640,910.00 617,650.00 0.00 240,620.00 6 Investments 7 Land 328,090.00 0,00 stock 704,540.00 553,320.00 8 Equipment 9 Accumulated depreciation-equipment Cash dividends (166,310.00) (147840.00) Decrease in accounts payable Decreașe in accounts receivable Decrease in accrued expenses payable 10 Total assets $2,361,010.00 $2,058,830.00 11 Liabilities and Stockholders' Equity $425,280.00 $404,550.00 52,020.00 12 Accounts payable Decrease in inventories 41,990.00 13 Accrued expenses payable Depreciation 24,190.00 20,170.00 14 Dividends payablie Gain on sale of investments 15 Common stock, $4 par…