Accounting: Tools for Business Decision Making, 5th Edition

Published by Wiley
ISBN 10: 1118128168
ISBN 13: 978-1-11812-816-9

Chapter 2 - A Further Look at Financial Statements - Exercises - Page 81: E2-11

Answer

Make sure to use correct formulas and interpret results as follows;

Work Step by Step

(W-1) (Year 2007) [Total debt (570172) / Total Assets (1,987,484)] = 28.7% (Same formula can be applied to year 2006 to find out the results.) (W-2) (Year 2007) [Cash provided by operations (749,268) minus capital expenditure (225,939) minus dividends paid (61,521) = 461,808 (Free cash flow). Same formula can be applied to year 2006 to find out the results.
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