a) create the Statement of Cash Flow and any required note disclosure using either the indirect or direct method.

(b) Using the Cash Flow Statement you created, compute the Current Cash Debt Coverage Ratio and the Free Cash Flow. Put your answer on the excel file as well. Beside each ratio you compute please say: Probably Good, Probably Bad, or Need More Information

Charli Ltd. Comparative Balance Sheet Information 31-Dec 31-Dec Assets 2021 2020 Cash 44,000 28,800 Accounts receivable, net 65,000 21,000 Inventory 85,000 69,600 Long term Investment (FV-OCI) -0- 8,800 Land 45,000 45,000 Building & Equipment 375,000 380,000 Accumulated depreciation -98,400 -80,800 Total assets 515,600 472,400 Liabilities and Shareholders Equity Accounts payable 35,000 31,500 Bonds Payable 15,000 -0- Preferred Shares 72,000 68,500 Common shares 338,400 338,400 Retained earnings 55,200 34,000 Total liabilities and shareholders equity 515,600 472,400 Charli Ltd. Income Statement For the Year Ended December 31, 2021 Sales 720,000 Cost of goods sold 480,000 Gross profit 240,000 Operating expenses: Operating expenses: 110,600 Depreciation expense 34,400 Total operating expenses 145,000 Income from operations 95,000 Loss on sale of equipment -3,200 Gain on sale of LT investment 9,600 Net Income before income tax 101,400 Income taxes 15,000 Net income 86,400 Other information: 1. Paid cash to purchase equipment: $ 20,600 2. Sold LT Investment Jan 1 2021 for cash of: $ 18,400 see Income Statement for Gain on Sale of this investment 3. Sold equipment for 5,600 cash that had originally cost 25,600 and had 16,800 of accumulated depreciation at the time of disposal. 4. Dividends were declared during 2021