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E5-16 Orozco

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E5-16 (Preparation of a Statement of Cash Flows) A comparative balance sheet for Orozco Corporation
is presented below.


Assets   2,012  2,011
Cash   63,000  22,000
Accounts receivable   82,000  66,000
Inventory   180,000  189,000
Land   71,000  110,000
Equipment   270,000  200,000
Accumulated depreciation - equipment   (69,000)  (42,000)
 Total   597,000  545,000
 
Liabilities and Stockholders' Equity 
 
Accounts payable   34,000  47,000
Bonds payable   150,000  200,000
Common stock ($1 par)   214,000  164,000
Retained earnings   199,000  134,000
 Total   597,000  545,000

Additional information:
1. Net income for 2012 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 common stock.

Instructions
(a) Prepare a statement of cash flows for 2012 for Orozco Corporation.
(b) Determine Orozco Corporation’s current cash debt coverage ratio, cash debt coverage ratio, and
free cash flow. Comment on its liquidity and financial flexibility.

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