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The following data came from the financial statements of the Green Company: Cash from operations$900,000Cash from investing activities350,000Cash from financing activities220,000Cash paid for capital expenditures55,000Net income425,000 Compute the cash flow-to-net income ratio.

Question

The following data came from the financial statements of the Green Company: Cash from operations$900,000Cash from investing activities350,000Cash from financing activities220,000Cash paid for capital expenditures55,000Net income425,000 Compute the cash flow-to-net income ratio.

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Solution

The cash flow-to-net income ratio is calculated by dividing cash flow from operations by net income.

Here are the steps to calculate it:

Step 1: Identify the cash flow from operations and the net income from the given data.

From the data given, Cash flow from operations = 900,000Netincome=900,000 Net income = 425,000

Step 2: Divide the cash flow from operations by the net income.

So, Cash flow-to-net income ratio = Cash flow from operations / Net income = 900,000/900,000 / 425,000 = 2.12

So, the cash flow-to-net income ratio of the Green Company is 2.12.

This problem has been solved

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