Analyzing the Statement of Cash Flows}

Rollins Inc. is considering expanding its operations into different provinces; however, this expansion will require significant cash flow as well as additional financing. Rollins reported the following information for 2018: cash provided by operating activities, \(\$ 387,200\); cash provided by investing activities, \(\$ 108,700\); average debt maturing over the next five years, \(\$ 345,500\); capital expenditures, \(\$ 261,430\); dividends, \(\$ 40,000\).

\section*{Required:}

Compute free cash flow and the cash flow adequacy ratio. (Note: Round ratio to two decimal places.) Comment on Rollins's ability to expand its operations.

\section*{Cornerstone Exercise