Question

Rollins Inc. is considering expanding its operations into different regions of the country; however, this expansion will require significant cash flow as well as additional financing. Rollins reported the following information for 2011: cash provided by operating activities, $387,200; cash provided by investing activities, $108,700; average debt maturing over the next five years, $345,500; capital expenditures, $261,430; dividends, $40,000.

Required:
Compute free cash flow and the cash flow adequacy ratio. Comment on Rollins’ ability to expand its operations.


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  • CreatedSeptember 22, 2015
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