solution

Following are financial statements of Stake Technology Inc..

Stake Technology Inc.Balance sheet December 31, 2015December 31, 2014Cash$46,200$25,200Accounts receivable28,10028,100Trading securities8,10023,700Plant assets(net)72,50080,000Land80,50067,000Total assets$235,400$224,000Accounts payable$31,000$35,200Long-term notes payable14,70047,900Bonds payable21,70021,700Common shares129,50099,000Retained earnings38,50020,200Total liabilities and shareholders’ equity$235,400$224,000

Stake Technology Inc.Statement of cash flowsFor the year ended December 31, 2015Cash flows from operating activities Net income23,000 Non-cash items (adjusted from net income) Depreciation expense7,500 Loss on sale of investments41,200 Cash in (out) from operating working capital Decrease in account payable(4,200) Net cash from operating activities 67,500Cash flows from investing activities Purchase of investments(25,600) Purchase of land(13,500) Net cash from investing activities (39,100)Cash flows from financing activities Cash received from common share issuance30,500 Repayment of long-term note(33,200) Cash paid for dividends(4,700) Net cash from financing activities (7,400)Net increase (decrease) in cash and cash equivalents 21,000Cash and cash equivalents, beginning of year 25,200Cash and cash equivalents, end of year $46,200

Please make sure your final answer(s) are accurate to 2 decimal places.
a) Calculate the cash debt coverage ratio.

Cash debt coverage ratio =0.78to 1

b) Calculate the free cash flow assuming that the company’s policy is to include dividends paid.