A comparative statement of financial position for Orozco AG is presented below.

Additional information:

1. Net income for 2022 was €105,000.

2. Cash dividends of €40,000 were declared and paid.

3. Bonds payable amounting to €50,000 were retired through issuance of ordinary shares.

Instructions

a. Prepare a statement of cash flows for 2022 for Orozco AG.

b. Determine Orozco’s current cash debt coverage, cash debt coverage, and free cash flow. Comment on its liquidity and financial flexibility.

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December 31 Assets 2022 2021 Land € 71,000 €110,000 Equipment 270,000 200,000 Accumulated depreciation-equipment (69,000) (42,000) Inventory 180,000 189,000 Accounts receivable 82,000 66,000 Cash 63,000 22,000 Total €597,000 €545,000 Equity and Liabilities Share capital-ordinary (€1 par) Retained earnings €214,000 €164,000 199,000 134,000 Bonds payable 150,000 200,000 Accounts payable 34,000 47,000 Total €597,000 €545,000