Question

Blossom Company reported the following selected information at March 31.

		2022
Total current assets		$189,800
Total assets		437,000
Total current liabilities		292,000
Total liabilities		349,600
Net cash provided by operating activities		60,000

Calculate the current ratio, the debt to assets ratio, and free cash flow for March 31, 2022. The company paid dividends of $10,000 and spent $24,000 on capital expenditures. (Round current ratio and debt to assets ratio to 2 decimal places, e.g. 15.25. If answer is negative enter it with a negative sign preceding the number e.g. -15,000 or in parentheses e.g. (15,000).)

Current Ratio______________:1

Debt to assets_____________%

Free cash flow $_______________

Answer 1

Solution:

Current ratio	0.65	: 1
Debt to assets	80	%
Free cash flow	$26,000

1.)

Current ratio = Current Assets ÷ Current liabilities

Total current assets	$189,800
Total current liabilities	$292,000
Current ratio ($189,800 / $292,000)	0.65 : 1

2.)

Debt to assets = Total liabilities ÷ Total Assets

Total liabilities	$349,600
Total assets	$437,000
Debt to Assets ($349,600 ÷ $437,000)	80%

3.)

Free cash flow = Net cash provided by operating activities - Dividends paid - Capital expenditures

Net cash provided by operating activities	$60,000
Less:Dividends paid	-$10,000
Less: Capital expenditures	-$24,000
Free cash flow	$26,000