A company reported the following information in its annual report for the current year.
Cash flows from operating activities$1,000,000
Additions to property, plant and equipment450,000
Total payments expected to retire long-term debt over the next 5 years500,000
Compute the cash flow adequacy ratio for the current year.
A. 1.10
B. 2.00
C. 5.50
D. 7.50
Answer: C
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