Calculate Cash-Flow Debt ratio Consider the following company\'s balance sheet a

Question

Calculate Cash-Flow Debt ratio

Consider the following company's balance sheet and income statement Balance Sheet Assets Liabilities and Equity Cash Accounts receivable Inventory $ 10,000 Accounts payable 72,000 Notes payable S 31,000 25,000 53,000 Total current assets Fixed assets 135,000 Total current liabilities 81,000 Long-term debt Equity 56,000 30,000 130,000 Total assets $ 216,000 Total liabilities and equity S 216,000 ncome Statement Sales (all on credit) Cost of goods sold $290,000 180,000 110,000 43,000 Gross margin Selling and administrative expenses Depreciation 7,000 60,000 EBIT Interest expense 6,100 53,900 Earnings before tax Taxes 16,170 Net income S 37,730

Explanation / Answer

Cash-Flow to Debt Ratio= Operating Cash Flow Total debt Operating Cash-Flow= Net Income+Depreciation+Taxes =$37,730+$16,170+$7,000 = $60,900 Cash-Flow to Debt Ratio= 60,900 =71% 86,000

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