Here are the financial statements of Kiwi Ltd. 

Additional information:

1. Dividends were declared and paid.

2. During the year equipment was sold for $13 000 cash. This equipment cost $19 500 originally and had a book value of $13 000 at the time of sale.

3. All depreciation expense, $10 400, is in the selling expense category.

4. All sales and purchases are on account.

5. Additional equipment was purchased for cash.

6. Accounts payable pertains to merchandise creditors.

7. All operating expenses except for depreciation are paid in cash.

Required

(a) Prepare a statement of cash flows using the direct method.

(b) Prepare a reconciliation between profit and cash provided by operating activities.

(c) Calculate these cash-based measures:

1. Current cash debt coverage

2. Cash debt coverage

3. Free cash flow.

(d) Discuss the cash adequacy as indicated by the ratios.  

Transcribed Image Text:

Assets Cash KIWI LTD Statement of financial position as at 31 December 2015 2015 Accounts receivable Inventory Property, plant, and equipment Less: Accumulated depreciation Total Liabilities and equity Accounts payable Income tax payable Bonds payable Contributed equity Retained earnings Total $ 91 000 (35 100) $ 33800 36 400 49 400 55 900 $175 500 $ 40 300 33 800 26 000 32 500 42 900 $175 500 $101 400 (31 200) 2014 $ 42900 18 200 32 500 70 200 $163 800 $ 55.900 26 000 13 000 32 500 36 400 $163 800