Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A comparative balance sheet for Indigo Corporation is presented as follows. December 31 Assets 2020 2019 Cash $ 72,900 $ 22,000 Accounts receivable 84,190 68,290

A comparative balance sheet for Indigo Corporation is presented as follows.

December 31

Assets

2020

2019

Cash $ 72,900 $ 22,000
Accounts receivable 84,190 68,290
Inventory 182,190 191,290
Land 73,190 112,290
Equipment 262,190 202,290
Accumulated Depreciation-Equipment (71,190 ) (44,290 )
Total $603,470 $551,870
Liabilities and Stockholders' Equity
Accounts payable $ 36,190 $ 49,290
Bonds payable 150,000 200,000
Common stock ($1 par) 214,000 164,000
Retained earnings 203,280 138,580
Total $603,470 $551,870

Additional information:

1. Net income for 2020 was $129,380. No gains or losses were recorded in 2020.
2. Cash dividends of $64,680 were declared and paid.
3. Bonds payable amounting to $50,000 were retired through issuance of common stock.

Determine Indigo Corporations current cash debt coverage, cash debt coverage, and free cash flow. (Round current cash debt coverage and cash debt coverage to 2 decimal places., e.g. 0.67.)

Current cash debt coverage :1
Cash debt coverage :1
Free cash flow

$

Comment on its liquidity and financial flexibility.

Indigo has poorexcellent liquidity. Its financial flexibility is goodbad.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Michelle Hanlon, Robert Magee, Glenn Pfeiffer, Thomas Dyckman

5th Edition

1618531654, 9781618531650

More Books

Students also viewed these Accounting questions