During the year, Lewis Jewellers generated net income of $303,000 and cash flow from operations of $340,000.

Question:

During the year, Lewis Jewellers generated net income of $303,000 and cash flow from operations of $340,000. Lewis also bought a building for $265,000 to open a new store and paid $22,000 in dividends. Lewis calculates that over the next five years, the company will have $10,000 of debt maturing annually.
Required
Calculate Lewis' and cash flow adequacy ratio.
Free Cash Flow
Free cash flow (FCF) represents the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets. Unlike earnings or net income, free cash flow is a measure of profitability that excludes the...