Consider the following information:

Windbag International, Inc.

Selected Financial Statement Information

(Dollars in Millions)

2000 1999 Total assets $1,086 $ 996 Total owners’ equity 681 660 Debt 145 201 Sales 1,256 1,199 Accounts receivable 28 27 Depreciation expense 74 69 Interest paid 19 22 Taxes paid 53 42 Purchases of property, plant, and equipment 142 117 Net cash outflow from investing activities 95 107 Cash flow from operating activities 166 147 Net income 97 79 Required

a. Calculate the following ratios, for each year:
1. Cash return on assets (2000 only)
2. Quality of sales 3. Quality of income 4. Cash interest coverage

b. Based on your ratios, evaluate Windbag’s performance. In what areas do the cash flow ratios indicate positive or negative performances?