(Preparation of Operating ActivitiesDirect Method) Malouin Corp.'s income statement for the year ended December 31, 2020, had the following condensed information:

Service revenue				$778,000
Operating expenses (excluding depreciation)		$499,000
Depreciation expense		66,000
Unrealized loss on FV-NI investments		4,000
Loss on disposal of equipment		14,000		583,000
Income before income tax				195,000
Income tax expense				58,000
Net income				$137,000

There were no purchases or sales of trading (FV-NI) investments during 2020.

Malouin's statement of financial position included the following comparative data at December 31:

		2020		2019
FV-NI investments		$22,000		$26,000
Accounts receivable		35,000		54,000
Accounts payable		44,000		31,000
Income tax payable		6,000		8,500

Questions:

a. Prepare the operating activities section of the statement of cash flows using the direct method.

b. Assume that Malouin Corp.'s current cash debt coverage ratio in 2019 was 4.5. Calculate the company's current cash debt coverage ratio in 2020, and discuss the results from the perspective of a creditor.