Selected financial information for Frank Corporation is presented below.

Selected 2020 transactions are as follows:

1. Purchased investment securities for $6,500 cash.
2. Borrowed $18,000 on a two-year, 8 percent interest-bearing note.
3. During 2020, sold machinery for its carrying amount; received $13,250 in cash.
4. Purchased machinery for $53,000; paid $10,500 in cash and signed a four-year note payable to the dealer for $42,500.
5. Declared and paid a cash dividend of $11,500 on December 31, 2020.

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

	December 31
	2020			2019
Cash	$	86,500		$	22,500
Accounts receivable		18,500			12,750
Inventory		53,500			63,000
Accounts payable		8,500			13,000
Accrued wages payable		1,550			2,500
Income taxes payable		6,500			3,750

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				$	430,000
Cost of sales					283,000
Gross profit					147,000
Expenses
Salaries and wages	$	52,500
Depreciation		10,700
Rent (no accruals)		7,300
Interest (no accruals)		13,700
Income tax		13,300
Total expenses					97,500
Net earnings				$	49,500

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.)

2. This part of the question is not part of your Connect assignment.

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.)