Westmoreland Company
Following Are Selected Data from Westmoreland Company's Financial

question 142

Multiple Choice

Westmoreland Company
Following are selected data from Westmoreland Company's financial statements.
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$\begin{array}{lrr}&2018&2017\\\text { Current liabilities } & \$ 230,000 & \$ 160,000 \\\text { Long-term debt } & 120,000 & 320,000 \\\text { Stockhol ders' equity } & 420,000 & 540,000 \\\text { Cash payments for additions to plant and equipment } & 45,000 & 32,000 \\\text { Net cash flow from operating activities } & 80,000 & 51,000 \\\text { Interest and principal payments } & 12,000 & 8,000 \\\text { Net operating cash flows before interest and taxes } & 68,000 & 43,000 \\\text { Net income } & 90,000 & 72,000 \\\text { Interest expense } & 8,500 & 11,500 \\\text { Income taxes } & 16,000 & 14,500 \\\text { Dividends paid } & 15,000 & 30,000\end{array}$ ​
-Refer to the Westmoreland Company data.
The cash flow from operations to capital expenditures ratio for 2018 is an indicator that Westmoreland Company

• A)has been effectively able to use operations to finance its acquisitions of productive assets.
• B)has increased profits by $13,000.
• C)has decreased cash,but is offset by the increase in net income.
• D)has net income that is more than it would have been had dividends of $30,000 been paid.

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Definitions:

Capital

Assets used for the production of goods and services, such as machinery, buildings, and equipment.

Bumper Crop

An unusually large harvest of a particular crop, often due to favorable growing conditions, exceeding average yields.

Production Possibility Frontier

A curve depicting the maximum output combinations of two goods or services an economy can achieve when using all resources efficiently.

Economic Problem

The fundamental challenge of having limited resources to meet unlimited wants, necessitating choices and priorities in resource allocation.