Selected financial information for Frank Corporation is presented below.

Selected 2020 transactions are as follows:

1. Purchased investment securities for $6,200 cash.
2. Borrowed $17,400 on a two-year, 8 percent interest-bearing note.
3. During 2020, sold machinery for its carrying amount; received $12,800 in cash.
4. Purchased machinery for $52,400; paid $10,200 in cash and signed a four-year note payable to the dealer for $42,200.
5. Declared and paid a cash dividend of $11,200 on December 31, 2020.

Selected account balances at December 31, 2019 and 2020 are as follows:

	December 31
	2020			2019
Cash	$	84,400		$	22,200
Accounts receivable		18,200			12,600
Inventory		53,200			62,400
Accounts payable		8,200			12,400
Accrued wages payable		1,400			2,200
Income taxes payable		6,200			3,600

One-fourth of the sales and one-third of the purchases were made on credit.

FRANK CORPORATION
Statement of Earnings
For the Year Ended December 31, 2020
Sales revenue				$	424,000
Cost of sales					280,000
Gross profit					144,000
Expenses
Salaries and wages	$	52,200
Depreciation		10,400
Rent (no accruals)		7,000
Interest (no accruals)		13,400
Income tax		13,000
Total expenses					96,000
Net earnings				$	48,000

Required:

1. Prepare a statement of cash flows for the year ended December 31, 2020 by using the indirect method. (Negative answers should be indicated by a minus sign.)

3. Compute the quality of earnings ratio and the capital expenditures ratio. (Enter your answers in numbers and not in percentages. Round the final answers to 2 decimal places.)