Financial statements for Hilton Company are presented below:

Hilton Company

Statement of Financial Position

December 31, 2019

AssetsEquity & Liabilities

Buildings and equipment$150,000Share capital-ordinary$65,000

Accumulated depreciationRetained earnings60,000

buildings and equipment(50,000)

Patents20,000

Accounts receivable35,000Bonds payable50,000

Cash40,000Accounts payable20,000

195,000195,000

Hilton Company

Statement of Cash Flows

For the Year Ended December 31, 2019

Cash flows from operating activities

Net income$45,000

Adjustments to reconcile net income to net cash

provided by operating activities:

Increase in accounts receivable$(16,000)

Increase in accounts payable8,000

Depreciation expense15,000

Gain on sale of equipment(6,000)

Amortization of patents2,0003,000

Net cash provided by operating activities48,000

Cash flows from investing activities

Sale of equipment12,000

Purchase of land(25,000)

Purchase of buildings and equipment (48,000)

Net cash used by investing activities(61,000)

Cash flows from financing activities

Payment of cash dividend(15,000)

Sale of bonds40,000

Net cash provided by financing activities25,000

Net increase in cash12,000

Cash, January 1, 201928,000

Cash, December 31, 201940,000

At the beginning of 2019, Accounts Payable amounted to 12,000 and Bonds Payable was 10,000.

Requirement

Calculate the following for Hilton Company:

a.Current cash debt coverage (3 marks)

b.Cash debt coverage (3 marks)

c.Free cash flow(4 marks)