A company reported the following information in its annual report for Year 1: cash flows from operating activities,$1,000,000; additions to property,plant,and equipment,$450,000; and total payments expected to retire long-term debt over the next five years,$500,000.Compute the cash flow adequacy ratio for Year 1.

Question

Quizplus · Accepted Answer

$1,000,000 (Cash flow from operating activities)F1F1F1S1-F1F1F10 $450,000 (Additions to property,plant,and equipment)= $550,000 / $100,000 ($500,000 / 5)= 5.50

A Company Reported the Following Information in Its Annual Report