The following statements are presented for Melvin Company.

Balance Sheet on December 31, 2020
Current assets	$3,125
Total assets	$6,335
Current liabilities	$1,600
Long-term debt	1,200
Total liabilities and shareholders' equity	$6,335

Note: 500 shares of common stock were outstanding. There is $135 cash dividend and no preferred dividend.

Statement of Cash Flows For the Year Ended December 31, 2020
Net cash provided by operating activities	$1,370
Net cash outflow for investing activities	(1,013)
Net cash outflow for Financing activities	(321)

Answer the following questions and show your work for partial credits.

1. Is the firm capable of covering total debt with the yearly operating cash flow?
2. Is the firm capable of covering cash dividends with the yearly operating cash flow?
3. Analyze the firm's ability to pay dividends.