Business, 06.09.2021 19:30 trvptrav

Rowan also provided the following information: The company sold equipment that had an original cost of $16 million and accumulated depreciation of $9 million. The cash proceeds from the sale were $11 million. The gain on the sale was $4 million.
The company did not issue any new bonds during the year.
The company paid a cash dividend during the year.
The company did not complete any common stock transactions during the year.

Required:
1. Using the indirect method, prepare a statement of cash flows for the year.
2. Calculate the free cash flow for the year.
3. To help Rowan assess its liquidity at the end of the year, calculate the following:
Current ratio & Acid-test (quick) ratio
4. To help Rowan assess its asset management, calculate the following:
Average collection period (assuming all sales are on account) & Average sale period

Answers: 1

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