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

Additional information:
1. Net income for 2015 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 2015 for Orozco Corporation.

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

Transcribed Image Text:

Assets Land Equipment Accumulated depreciation-equipment Inventory Accounts receivable December 31 2015 2014 71,000 110,000 270,000 200,000 (69,000) (42,000) 180,000 189,000 82,000 66,000 63,000 22,000 597,000 545,000 Cash Total Equity and Liabilities Share capital-ordinary (1 par) 214,000 164,000 Retained earnings 199,000 134,000 Bonds payable 150,000 200,000 Accounts payable 34,000 47,000 Total 597,000 545,000