Presented here are a statement of income and retained earnings and comparative balance sheets for McCutcheon, Inc., which operates a national chain of home improvement stores.

1. Prepare a statement of cash flows for McCutcheon, Inc., for the year ended December 31, 2015, using the indirect method in

the Operating Activities section of the statement.

2. McCutcheons management is concerned with its short-term liquidity and its solvency over the long run. To help management

evaluate these, compute the following ratios, rounding all answers to the nearest one tenth of a percent.

a. Current ratio

b. Acid-test ratio

c. Accounts receivable turnover ratio

d. Number of days sales in receivables

e. Inventory turnover ratio

f. Number of days sales in inventory

g. Debt-to-equity ratio

3. Comment on McCutcheons liquidity and its solvency. What additional information do you need to fully evaluate the

company?