The following are totals from selected financial statements of Macy May Company for the years ended December 31, 2015, 2016 and 2017:
?
12/31/2015
12/31/2016
12/31/2017
Cash flows provided by operating activities
?
$ 204,000
$ 184,000
Cash flows provided by investing activities
?
(15,500)
(19,750)
Cash flows used by financing activities
?
(45,000)
20,000
Net increase in cash
?
$ 143,500
$ 184,250
Net income
?
$ 55,000
$ 74,000
Current assets
$ 155,000
175,000
201,250
Total assets
245,000
300,000
345,000
Current liabilities
85,000
100,000
115,000
Total liabilities
212,500
250,000
287,500
?
?
Required:1) Compute the operating cash flow ratios for the years ended December 31, 2016 and 2017.2) Compute the operating cash flow to total liabilities ratios for the years ended December 31, 2016, and 2017.
What will be an ideal response?
| 2016-Operating cash flow ratio |
| Operating cash flow ratio = $204,000/[($85,000+$100,000)/2] |
| Operating cash flow ratio = $204,000/$92,500 |
| Operating cash flow ratio = 2.21 |
| ? |
| 2017-Operating cash flow ratio |
| Operating cash flow ratio = $184,000/[($100,000+$115,000)/2] |
| Operating cash flow ratio = $184,000/$107,500 |
| Operating cash flow ratio = 1.71 |
| ? |
| 2016-Operating cash flow to total liabilities ratio |
| Operating cash flow to total liabilities ratio = $204,000/[($212,500 + $250,000)/2] |
| Operating cash flow to total liabilities ratio = $204,000/ $231,250 |
| Operating cash flow to total liabilities ratio = 0.88 |
| ? |
| 2017-Operating cash flow to total liabilities ratio |
| Operating cash flow to total liabilities ratio = $184,000/[($250,000 + $287,500)/2] |
| Operating cash flow to total liabilities ratio = $184,000/ $268,750 |
| Operating cash flow to total liabilities ratio = .69 |
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