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A company reports the amounts below in its statement of cash flows.

Net cash flow from investing activities $ 66,480
Net cash flow from financing activities $ 30,780
Total net cash flow $123,000
Current liabilities beginning of year $ 19,500
Current liabilities end of year $ 23,400

What is the company's operating cash flows to current liabilities ratio?

A. 1.19
B. 1.30
C. 1.20
D. 6.21
E. None of the above

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Respuesta :

Answer:

C. 1.20

Explanation:

The total net cash flow consist of net cash flows from 3 activities namely; Operating activities, Investing activities and Financing activities.

Let the cash flows from operating activities be y

Therefore,

123,000  = y + 66,480  + 30,780  

y = 123,000 - 66,480  - 30,780  

y = 25,740

Current liabilities = (23,400 + 19,500)/2

                            = 21450

The company's operating cash flows to current liabilities ratio

= 25,740 /21450

= 1.20

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