Question
Analyzing Cash Flow Ratios Molly Enterprises reported the following information for the past year of operations:...
Analyzing Cash Flow Ratios
Molly Enterprises reported the following information for the past
year of operations:
For each transaction, indicate whether the ratio will Increase,
Decrease, or have No Effect.
Transaction |
Free Cash Flow $250,000 |
Operating-Cash-Flow-to- Current Liabilities Ratio 1.0 times |
Operating-Cash-Flow-to- Capital Expenditures Ratio 3.0 times |
|---|---|---|---|
| a. Recorded credit sales of $8,000 | AnswerIncreaseDecreaseNo Effect | AnswerIncreaseDecreaseNo Effect | AnswerIncreaseDecreaseNo Effect |
| b. Collected $8,000 owed from customers | AnswerIncreaseDecreaseNo Effect | AnswerIncreaseDecreaseNo Effect | AnswerIncreaseDecreaseNo Effect |
| c. Purchased $23,000 of equipment on long-term credit | AnswerIncreaseDecreaseNo Effect | AnswerIncreaseDecreaseNo Effect | AnswerIncreaseDecreaseNo Effect |
| d. Purchased $18,000 of equipment for cash | AnswerIncreaseDecreaseNo Effect | AnswerIncreaseDecreaseNo Effect | AnswerIncreaseDecreaseNo Effect |
| e. Paid $7,000 of wages with cash | AnswerIncreaseDecreaseNo Effect | AnswerIncreaseDecreaseNo Effect | AnswerIncreaseDecreaseNo Effect |
| f. Recorded utility bill of $4,500 that has not been paid | AnswerIncreaseDecreaseNo Effect | AnswerIncreaseDecreaseNo Effect | AnswerIncreaseDecreaseNo Effect |
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