(a) Cash Coverage of Growth Ratio and the (b) Free Cash Flows available in the columns to the right of each scenario. Your Ratios and Calculations should include the written definition, show the amounts used in each formula, be labeled clearly, be presented in good form

Scenario 2 (13 points): A Statement of Cash Flows is presented below for Good Grub Grocery. Calculate the Cash Coverage of Growth Ratio and the Free Cash Flows for this Good Grub Grocery Statement of Cash Flows For the year ending December 31, 2020 Solution for Scenario 2: $ Cash Coverage of Growth Ratio Definition: Cash Flows from Operating Activities: Cash received from customers Cash paid to suppliers Cash paid for selling and administrative expenses Cash paid for interest Cash paid for taxes Net Cash Flows Provided by Operating Activities 967,000 (624,000) (227,000) (4,980) (16,675) 94,345 Free Cash Flows Calculation Formula: Cash Flows from Investing Activities: Proceeds from sale of delivery truck Purchase of refrigerated display cases Purchase of new forklifts Net Cash Flows Used for Investing Activities 4,500 (13,445) (15,980) (24,925) Cash Flows from Financing Activities: Payment of principal on note payable Proceeds from issue of common stock shares Net Cash Flows Used for Financing Activities (22,500) 8,900 (13,600) Question: In the yellow box below, determine the adequacy of Good Grub's Free Cash Flow and briefly explain your response. Also briefly explain why adequate Free Cash Flow is important (note--you may use a bullet pointed list to do so). Net Cash Provided during year Beginning Cash at January 1, 2020 Ending Cash at December 31, 2020 55,820 387,224 443,044 $ Check Figure for Scenario 2: Cash Coverage of Growth = 2.81. Note that cash paid for Property is inserted as a positive number to provide a positive ratio