Use the following information to compute and interpret cash flow ratios.

		Average
	Operating	Current
Company	Cash Flow	Liabilities	CAPEX
a	$2,306	$6,581	$2,425
b	5,868	2,181	1,007
c	3,902	3,365	1,220
d	2,900	5,192	1,984

a. Compute the operating cash flows to current liabilities ratio. Compared to the average of 0.5 for large public companies, assess each company's liquidity as low, medium, or high (i.e. its ability) to settle liabilities as they come due).

b. Compute the operating cash flow to CAPEX ratio. Compared to the rule of thumb of 1.0 assess the company's solvency as either low, medium, or high.

Round answers to two decimal places.

Company	Operating cash flow to current liabilities	Liquidity	Operating cash flow to CAPEX	Solvency
a	Answer	AnswerLowMediumHigh	Answer	AnswerLowMediumHigh
b	Answer	AnswerLowMediumHigh	Answer	AnswerLowMediumHigh
c	Answer	AnswerLowMediumHigh	Answer	AnswerLowMediumHigh
d	Answer	AnswerLowMediumHigh	Answer	AnswerLowMediumHigh

Statement of Cash Flows (Indirect Method)
Following are the income statement and balance sheet for Seagate Technology for the year ended June 28, 2019, and a forecasted income statement and balance sheet for 2020.

SEGATE TECHNOLOGY PLC
Consolidated Statements of Income
	June 2019	June 2020
For Years Ended ($ millions)	Actual	Est.
Revenue	$31,170	$32,730
Cost of revenue	22,374	23,499
Product development	2973	3,108
Marketing and administrative	1359	1440
Amortization of intangibles	69	69
Restructuring and other, net	(66)	0
Total operating expense	26,709	28,116
Income from operations	4,461	4,614
Interest income	252	252
Interest expense	(672)	(672)
Other, net	75	75
Other expense, net	(345)	(345)
Income before income taxes	4,116	4,269
(Benefit) provision for income taxes	(1,920)	897
Net income	$6,036	$3,372

SEGATE TECHNOLOGY PLC
Consolidated Balance Sheets
	June 2019	June 2020
For Years Ended ($ millions)	Actual	Est.
Current assets
Cash and cash equivalents	$6,660	$7,749
Accounts receivable, net	2967	3,108
Inventories	2910	3,045
Other current assets	552	588
Total current assets	13,089	14,490
Property, equipment and leasehold improvements, net	5,607	5,913
Goodwill	3,711	3,711
Other intangible assets, net	333	264
Deferred income taxes	3,342	3,501
Other assets, net	573	588
Total Assets	$26,655	$28,467
Current liabilities
Accounts payable	$4,260	$4,485
Accrued employee compensation	507	525
Accrued warranty	273	294
Accrued expenses	1656	1734
Total current liabilities	6,696	7,038
Long-term accrued warranty	312	327
Long-term accrued income taxes	12	12
Other noncurrent liabilities	390	426
Long-term debt, less current portion	12,759	12,759
Total liabilities	20,169	20,562
Shareholders' equity
Ordinary shares—par value $0.0001,
2.6 billion shares authorized	-	-
Additional paid-in capital	19,635	19,932
Accumulated other comprehensive loss	(102)	(102)
Accumulated deficit	(13,047)	(11,925)
Total shareholders' equity	6,486	7,905
Total liabilities and shareholders' equity	$26,655	$28,467

The following additional information pertains to the balance sheet and income statement for the year ended June 30, 2020 ($ millions).

Depreciation expense (included in operating expenses)	$1,593
Stock-based compensation	297
Amortization expense	69
Capital expenditures	1899
Dividends	2250

Required
Prepare a forecasted statement of cash flows for June 2020 using the indirect method. (Hint: Stockbased compensation is a noncash expense like depreciation and must be added back in the operating section. The amount expensed is also added to the company’s “Additional paid-in capital” account in the balance sheet.)

SEAGATE TECHNOLOGY PLC
Statement of Cash Flows ($ Millions)
Forecasted for Year Ended June 30, 2020
Net income	Answer
Add: Depreciation	Answer
Add: Amortization	Answer
AnswerAdd Interest paidAdd Restructuring chargesAdd Stock based compensationCAPEXChange in accumulated deficitChange in accumulated depreciationPayment of dividends	Answer
Accounts receivable, net increase	Answer
Inventories increase	Answer
Other current assets increase	Answer
Deferred income taxes increase	Answer
Other assets, net increase	Answer
Accounts payable increase	Answer
Accrued employee compensation increase	Answer
Accrued warranty increase	Answer
Accrued expenses increase	Answer
Long-term accrued warranty increase	Answer
Other non-current liabilities increase	Answer
AnswerNet Cash Provided by Operating ActivitiesNet Cash Used by Operating ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Used by Financing Activities	Answer
AnswerAdd Interest paidAdd Restructuring chargesAdd Stock based compensationCAPEXChange in accumulated deficitChange in accumulated depreciationPayment of dividends	Answer
AnswerNet Cash Provided by Operating ActivitiesNet Cash Used by Operating ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Used by Financing Activities	Answer
AnswerAdd Interest paidAdd Restructuring chargesAdd Stock based compensationCAPEXChange in accumulated deficitChange in accumulated depreciationPayment of dividends	Answer
AnswerNet Cash Provided by Operating ActivitiesNet Cash Used by Operating ActivitiesNet Cash Provided by Investing ActivitiesNet Cash Used by Investing ActivitiesNet Cash Provided by Financing ActivitiesNet Cash Used by Financing Activities	Answer
Net change in cash	Answer
Beginning cash	Answer
Ending cash	Answer