For the year ended September 30, 2019 Instruction: Answer All Questions Question 1 20 marks Sales Less: Cost of goods sold Gross Profit - 5,000,000 3.500.000 1.500.000 Below are the unclassified financial statements for Jazzec Ltd for the year ended September 30, 2019: Jazzec Ltd Statement of Financial Position As at September 30, 2019 2016 Less Expenses: Salaries & Employee Benefits Depreciation Expense Interest Expense Insurance Income Tax Expense Net Profit 600,000 200,000 150,000 100,000 250.000 1.300.000 200.000 Accounts Receivable (Net] Inventory 200.000 50.000 300,000 375,000 B25,000 300,000 20.000 25,000 2.500,000 2.000.000 1700,000) 500.000 Additional Information: - No equipment was sold during the year - No dividends were declared and paid during the year Prepaid Insurance Expenses Equipment Accumulated Depreciation Required: a) Prepare the operating activities section of the statement of cash flows using the direct method (15 marks) 2145.000 2.750.000 b) Calculate the company's current debt coverage ratio and free cash flow. Comment on the company's cash flow liquidity 15 marks) Accounts Payable Salaries & Wages Payable Income Tax Payable Accrued Interest Payable Bonds Payable due July 31, 2022 Common Shares Retained earnings Total liabilities and shareholder's equity 500,000 300.000 120,000 17,000 400,000 1,378,000 430,000 450,000 315,000 115,000 20,000 450,000 1.140,000 230,000 3,145,000 2.750,000