Presented below are the financial statements of Helwany Company.
|
HELWANY COMPANY |
||
|
Assets |
2012 |
2011 |
|
Cash |
$ 35,000 |
$ 20,000 |
|
Accounts receivable |
20,000 |
14,000 |
|
Inventory |
28,000 |
20,000 |
|
Property, plant, and equipment |
60,000 |
78,000 |
|
Accumulated depreciation |
(32,000) |
(24,000) |
|
Total |
$111,000 |
$108,000 |
|
Liabilities and Stockholders” Equity |
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|
Accounts payable |
$ 19,000 |
$ 15,000 |
|
Income taxes payable |
7,000 |
8,000 |
|
Bonds payable |
17,000 |
33,000 |
|
Common stock |
18,000 |
14,000 |
|
Retained earnings |
50,000 |
38,000 |
|
Total |
$111,000 |
$108,000 |
|
HELWANY COMPANY |
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|
Sales |
$242,000 |
|
|
Cost of goods sold |
175,000 |
|
|
Gross profit |
67,000 |
|
|
Selling expenses |
$18,000 |
|
|
Administrative expenses |
6,000 |
24,000 |
|
Income from operations |
43,000 |
|
|
Interest expense |
3,000 |
|
|
Income before income taxes |
40,000 |
|
|
Income tax expense |
8,000 |
|
|
Net income |
$ 32,000 |
|
Additional data:
1. Depreciation expense was $17,500.
2. Dividends declared and paid were $20,000.
3. During the year equipment was sold for $8,500 cash. This equipment cost $18,000 originally and had accumulated depreciation of $9,500 at the time of sale.
Instructions
(a) Prepare a statement of cash flows using the indirect method.
(b) Compute these cash-based measures:
(1) Current cash debt coverage ratio.
(2) Cash debt coverage ratio.
(3) Free cash flow.