Homework Answers
(a) Free Cash Flow
= Cash flow from operating activities - Capital expenditure
= 90,000 - 31,000
= $59,000
(b) Operating cash flow to current liabilities ratio
= Operating cash flow/current liabilities
= 90,000/60,000 = 1.50 : 1
(c) Operating cash flow to capital expenditure ratio
= 90,000/31,000 = 2.903 : 1
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Cash Flow Ratio
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