$($Preparation and Analysis of Statement of Cash Flows$)$ Here are the financial statements of Falcon Company.

Falcon Company

Comparative Balance Sheets

December $31,2018$

Assets $20182017$

Cash $$14,300$ $$18,150$

Accounts receivable $15,4007,700$

Merchandise inventory $20,90013,750$

Property, plant, and equipment $$38,500$ $$42,900$

Less: Accumulated depreciation $(14,850)23,650(13,200)29,700$

Total $$74,250$ $$69,300$

Liabilities and Stockholders$$ Equity

Accounts payable $$17,050$ $$23,650$

Income taxes payable $14,30011,000$

Bonds payable $11,0005,500$

Common stock $13,75013,750$

Retained earnings $18,15015,400$

Total $$74,250$ $$69,300$

Falcon Company

Income Statement

For the Year Ended December $31,2016$

Sales $$157,300$

Cost of goods sold $106,700$

Gross profit $50,600$

Selling expenses $$15,400$

Administrative expenses $4,95020,350$

Income from operations $30,250$

Interest expense $3,850$

Income before income taxes $26,400$

Income tax expense $3,850$

Net income $$22,550$

Additional data:

$1.$ Dividends of $$19,800$ were declared and paid.

$2.$ During the year equipment was sold for $$5,500$ cash. This equipment cost $$8,250$

originally and had a book value of $$5,500$ at the time of sale.

$3.$ All depreciation expense, $$4,400,$ is in the selling expense category.

$4.$ All sales and purchases are on account.

$5.$ Additional equipment was purchased for $$3,850$ cash.

Instructions:

$($a$)$ Prepare a statement of cash flows using the indirect method.

Falcon Company

Statement of Cash Flows

For the Year Ended December $31,2018$

Cash flows from operating activities

Adjustments to reconcile NI to net cash provided by operating activities

Cash flows from investing activities

Cash flows from financing activities

$($b$)(1)$ Compute the current cash debt coverage ratio.

Current cash debt coverage ratio $=$

Current cash debt coverage ratio $=$

Current cash debt coverage ratio $=$

$($b$)(2)$ Compute the cash debt coverage ratio.

Cash debt coverage ratio

Cash debt coverage ratio

Cash debt coverage ratio

$($b$)(3)$ Compute the free cash flow.

Free cash flow $=--$

Free cash flow $=--$

Free cash flow $=$