A company reported the following information in its Year 1 annual report: cash flows from operating activities,$295,000; additions to property,plant,and equipment,$110,000; proceeds from disposals of property,plant,and equipment,$57,000; and total payments expected to retire long-term debt over the next five years,$250,000.What is the cash flow adequacy ratio for Year 1?

Question

Quizplus · Accepted Answer

$295,000 (Cash flow from operating activities)F1F1F1S1-F1F1F10 $110,000 (Additions to PP&E)= $185,000
Avg.amount of debt maturing $250,000 / 5 years = $50,000
$185,000 / $50,000 = 3.70

A Company Reported the Following Information in Its Year 1