Question
Financial statements for Hilton Company are presented below: Hilton Company Statement of Financial Position December 31, 2019 Assets Equity & Liabilities Buildings and equipment$150,000Share capital-ordinary$65,000
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)
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