Financial statements for Hilton Company are presented below:

Hilton Company

Statement of Financial Position

December 31, 2019

Assets Equity & Liabilities

Buildings and equipment $150,000 Share capitalordinary $65,000

Accumulated depreciation Retained earnings 60,000

buildings and equipment (50,000)

Patents 20,000

Accounts receivable 35,000 Bonds payable 50,000

Cash 40,000 Accounts payable 20,000

195,000 195,000

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 payable 8,000

Depreciation expense 15,000

Gain on sale of equipment (6,000)

Amortization of patents 2,000 3,000

Net cash provided by operating activities 48,000

Cash flows from investing activities

Sale of equipment 12,000

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 bonds 40,000

Net cash provided by financing activities 25,000

Net increase in cash 12,000

Cash, January 1, 2019 28,000

Cash, December 31, 2019 40,000

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)