Selected Data Taken from the 2014 Financial Statements of Phillips

question 87

Essay

Selected data taken from the 2014 financial statements of Phillips Card Company, Inc. are as follows (in millions). $$\begin{array} { l r } \text { Net sales } & \$ 295.9 \\\text { Current liabilities, February 28, } 2013 & 39.5 \\\text { Current liabilities, February 28, 2014 } & 47.5 \\\text { Net cash provided by operating activities } & 17.0 \\\text { Total liabilities, February 28, 2013 } & 64.2 \\\text { Total liabilities, February 28, } 2014 & 71.2 \\\text { Capital expenditures } & 2.6 \\\text { Cash dividends } & 6.5\end{array}$$ Instructions
Compute these ratios at February 20, 2014:
(a) Current cash debt coverage
(b) Cash debt coverage
(c) Free cash flow
Provide a brief interpretation of your results.

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Definitions:

Debit Side

The left side of a ledger account that records increases in assets and expenses or decreases in liabilities and equity.

Debits

These are entries on the left side of accounting records, used to increase asset or expense accounts or decrease liabilities, equity, or revenue accounts.

Credits

Accounting entries that increase liabilities or equity or decrease an asset or expense.