b. Prepare a statement of cash flows LO3 P12-5A. Analyzing Cash Flow Ratios Pearce Enterprises reported the following information for the past year of operations: Operating-Cash- Free Cash Flow $250,000 Flow-to-Current- Liabilities Ratio 1.0 times Operating-Cash- Flow-to-Capital- Expenditures Ratio 3.0 times Transaction Recorded credit sales of $9,000 a. b. Collected $4,000 owed from customers c. Purchased $28,000 of equipment on long-term credit d. Purchased $16,000 of equipment for e. cash Paid $10,000 of wages with cash f. Recorded utility bill of $1,750 that has not been paid For each transaction, indicate whether the ratio will (I) increase, (D) decrease, or (N) have no effect. Transaction Operating Cash Flow to Current Liabnilities Operating Cash Flow to Capital Expenditures Free Cash Flow $250,000 Ratio 1.0 times ratio 3.0 times Sample response a. Recorded credit sales of $9,000 (N) No effect (N) No effect (N) No effect b. Collected $4,000 owned from customers C. Purchased $28,000 of equipment on long term credit d. Purchased $16,000 of equipment for cash e. Paid $10,000 of wages for cash f. Recorded utility bill of $1,750 that has not been paid For each transaction, indicate whether the ratio will (1)increase, (D) decrease, or (N) have no effect