Hello! I need help with the Current Ration and the Free Cash Flow. I'd like an explanation if possible, not just the answer, I have been struggling with this for a while! Thanks in advance!
Exercise 5-18 The comparative balance sheets of Blossom Corporation at the beginning and end of the year 2020 appear below. BLOSSOM CORPORATION BALANCE SHEETS Dec. 31, 2020 Jan 1, 2020 Inc./Dec. Assets $21,540 $14,060 $7,480Inc. Accounts receivable 107,540 89,060 18,480Inc. Equipment 40,540 23,060 17,480Inc. Less: Accumulated Depreciation-Equipment (17,000) (11,000) 6,000Inc. Total $152,620 $115,180 Liabilities and Stockholders' Equity Accounts payable $21,540 $16,060 5,480Inc. Common stock 101,540 81,060 20,480Inc. Retained earnings 29,540 18,060 11,480Inc. Total $152,620 $115,180 Net income of $45,540 was reported, and dividends of $34,060 were paid in 2020. New equipment was purchased and none was sold. Your answer is correct. Prepare a statement of cash flows for the year 2020. (Show amounts that decrease cash flow with either a - sign e.g.-15,000 or in parenthesis e.g. (15,000). BLOSSOM CORPORATION Statement of Cash Flows For the Year Ended December 31, 2020 Cash Flows from Operating Activities T Net Income Adjustment to reconcile net income to Net Cash Provided by Operating Activities Depreciation 6000 Increase in Accounts Payable 1 5480 T Increase in Accounts Receivable 18480 T -7000 T Net Cash Provided by Operating Activities 38540 Cash Flows from Investing Activities Purchase of Equipment -17480 Cash Flows from Financing Activities T issuance of Stock 20480 Payment of Dividends 1 -34060 Net Cash Used by Financing Activities - 13580 Net Increase in Cash 7480 TCash at Beginning of Year 14060 TCash at End of Year 21540 x Your answer is incorrect. Try again. Compute the current ratio (current assets + current liabilities) as of January 1, 2020, and December 31, 2020. (Round ratios to 1 decimal place., e.g. 4.5.) December 31, 2020 January 1, 2020 Current ratio Compute free cash flow for the year 2020. (Show amounts that decrease cash flow with elther a-sign e.g.-15,000 or in parenthesis e.g. (15,000).) Free Cash Flow 1 2 1060
