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A comparative balance sheet for Headland Corporation is presented as follows
A comparative balance sheet for Headland Corporation is presented as follows.
December 31
Assets
2020
2019
Cash $ 72,860 $ 22,000
Accounts receivable 84,840 68,980
Inventory 182,840 191,980
Land 73,840 112,980
Equipment 262,840 202,980
Accumulated Depreciation-Equipment (71,840 ) (44,980 )
Total $605,380 $553,940
Liabilities and Stockholders' Equity
Accounts payable $ 36,840 $ 49,980
Bonds payable 150,000 200,000
Common stock ($1 par) 214,000 164,000
Retained earnings 204,540 139,960
Total $605,380 $553,940
Additional information:
1. Net income for 2020 was $130,680. No gains or losses were recorded in 2020.
2. Cash dividends of $66,100 were declared and paid.
3. Bonds payable amounting to $50,000 were retired through issuance of common stock.
Determine Headland Corporation's current cash debt coverage, cash debt coverage, and free cash flow. (Round current cash debt coverage and cash debt coverage to 2 decimal places, e.g. 0.67.)
Current cash debt coverage
:1
Cash debt coverage
:1
Free cash flow
$
Comment on its liquidity and financial flexibility.
Headland has
liquidity. Its financial flexibility is
Expert Solution
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