Selected data taken from a recent years financial statements of trading card com

Question

Selected data taken from a recent years financial statements of trading card company Topps Company, Inc. are as follows (in millions).

Compute these ratios: current cash debt coverage ratio, cash debt coverage ratio, and free cash flow. Provide a brief interpretation of your results. (Round answers to 2 decimal places, e.g. 0.12.)

Net sales $326.7 Current liabilities, beginning of year 41.1 Current liabilities, end of year 62.4 Net cash provided by operating activities 10.4 Total liabilities, beginning of year 65.2 Total liabilities, end of year 73.2 Capital expenditures 3.7 Cash dividends 6.2 Selected data taken from a recent year's financial statements of trading card company Topps Company, Inc. are as follows (in millions). Compute these ratios: current cash debt coverage ratio, cash debt coverage ratio, and free cash flow. Provide a brief interpretation of your results. (Round answers to 2 decimal places, e.g. 0.12.)

Explanation / Answer

Hi,

Please find the answer as follows:

Current cash debt coverage ratio = 10.4/(41.1 +62.4)/2 = .20

Cash debt coverage ratio = (10.4 - 6.2)/73.2 = .06

Free Cash Flow = 10.4 - 3.7 - 6.2 = .5 million

Thanks.

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