Question
Analyzing Cash Flow Ratios Meagan Enterprises reported the following information for the past year of operations: For each transaction, indicate whether the ratio will (I)
Analyzing Cash Flow Ratios
Meagan Enterprises reported the following information for the past year of operations: For each transaction, indicate whether the ratio will (I) increase, (D) decrease, or (N) have no effect.
| Transaction | Free Cash Flow $400,000 | Operating-Cash-Flow-to- Current Liabilities Ratio 1.1 times | Operating-Cash-Flow-to- Capital Expenditures Ratio 5.0 times |
|---|---|---|---|
| a. Recorded credit sales of $17,000 | AnswerIncreaseDecreaseNo Effect | AnswerIncreaseDecreaseNo Effect | AnswerIncreaseDecreaseNo Effect |
| b. Collected $6,000 owed from customers | AnswerIncreaseDecreaseNo Effect | AnswerIncreaseDecreaseNo Effect | AnswerIncreaseDecreaseNo Effect |
| c. Purchased $50,000 of equipment on long-term credit | AnswerIncreaseDecreaseNo Effect | AnswerIncreaseDecreaseNo Effect | AnswerIncreaseDecreaseNo Effect |
| d. Purchased $70,000 of equipment for cash | AnswerIncreaseDecreaseNo Effect | AnswerIncreaseDecreaseNo Effect | AnswerIncreaseDecreaseNo Effect |
| e. Paid $17,000 of wages with cash | AnswerIncreaseDecreaseNo Effect | AnswerIncreaseDecreaseNo Effect | AnswerIncreaseDecreaseNo Effect |
| f. Recorded utility bill of $14,750 that has not been paid | AnswerIncreaseDecreaseNo Effect | AnswerIncreaseDecreaseNo Effect | AnswerIncreaseDecreaseNo Effect |
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Public Sector Accounting Auditing And Control In South Eastern Europe
Authors: Vesna Vašiček, Gorana Roje
1st Edition
303003352X, 978-3030033521
