Malouin Corp.'s income statement for the year ended December 31, 2017 had the following condensed information:

There were no purchases or sales of trading (FV-NI) investments during 2017.
Malouin's statement of financial position included the following comparative data at December 31:

Instructions
(a) Prepare the operating activities section of the statement of cash flows using the direct method.
(b) Assume that Malouin Corp.'s current cash debt coverage ratio in 2016 was 4.5. Calculate the company's current cash debt coverage ratio in 2017, and discuss the results from the perspective of a creditor.

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Service revenue Operating expenses (excluding depreciation) Depreciation expense Unrealized loss on FV-NI investments Loss on disposal of equipment Income before income tax Income tax expense Net income $499,000 66,000 4,000 14,000 583.000 195,000 58,000 $137,000 FV-NI investments Accounts receivable Accounts payable Income tax payable 2017 $22,000 35,000 44,000 6,000 2016 $26,000 54,000 31,000 8,500