Answer:
The Net Debt to Operating Cash Flow Ratio in 2020 is:
2.26
Explanation:
a) Data and Calculations:
Tax rate 35%
                      2020     2019
Revenues           $42,629   $37,911
Cost of goods sold     23,704   24,832
Interest                1,230    1,584
Dividends              1,200     600
Depreciation           2,609    2,814
Administrative expenses 7,040 Â Â Â 6,820
Cash                  3,671    2,969
Inventory              3,968    4,503
Accounts payable       2,325    3,760
Long-term debt        19,105   25,900
Accounts receivable     4,601     5,318
Common stock       22,600    19,800
Net fixed assets       41,260    42,110
Cash Flow from operations:
                     2020     2019
Revenues           $42,629   $37,911
Cost of goods sold     23,704   24,832
Interest                1,230    1,584
Administrative expenses 7,040 Â Â Â 6,820
Net cash flow            $10,655
Working capital adjustment:
Inventory                   535 (-3,968 + 4,503)
Accounts payable          (1,435) (-2,325 + 3,760)
Accounts receivable          717  (-4,601 + 5,318)
Net cash from operations $10,472
Total debt:
Long-term debt = $19,105
Current debt = Â Â Â Â 4,601
Total debt = Â Â Â Â $23,706
Cash flow-to-debt ratio = Total debt/Net cash from operations
= $23,706/$10,472
= 2.26
b) The cash flow-to-debt ratio is the ratio of a company's cash flow from operations to its total debt, which shows how long (2.26 years) it takes the company to repay its debt if it devoted all of its cash flow to debt repayment.
