60000 Net increase in cash 51000 Cash at beginning of year 22000 Cash at end of

60000 net increase in cash 51000 cash at beginning of

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   (60,000 ) Net increase in cash .................................................... 51,000 Cash at beginning of year ...........................................     22,000 Cash at end of year ...................................................... $  73,000 Noncash investing and financing activities       Issued common stock to retire $50,000 of bonds outstanding
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EXERCISE 5-16 (Continued) (b) Current cash debt coverage =     Net cash provided by operating activities Average current liabilities $132,000 ($34,000 + $47,000) / 2   =  3.26 to 1 Cash debt coverage =  Net cash provided by operating activities = Average total liabilities $132,000  ÷ $184,000 + $247,000 = 2 .61 to 1 Free Cash Flow Analysis Net cash provided by operating activities ......................... $132,000 Less:  Purchase of equipment ............................................ (60,000)            Dividends ...................................................................    (60,000 ) Free cash flow ...................................................................... $  12,000
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Shabbona has excellent liquidity. Its financial flexibility is good. It might be noted that it substantially reduced its long-term debt in 2014 which will help its financial flexibility.
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