Answer:
Sarasota Corporation
1. Statement of Cash Flows for the year ended December 31, 2020:
Operating Activities:
Net Income                          $129,720
Non-cash adjustment:
Depreciation                           26,680
Cash from operating         $ 156,400
Changes in working capital:
Accounts Receivable             (15,680)
Inventory                                  9,320
Accounts Payable                 (13,320)
Net cash from operating activities       $136,720
Investing Activities:
Land                                      39,320
Equipment                           (59,680)
Net cash from investing activities        $(20,360)
Financing Activities:
Cash dividends                                     $(65,680)
Net cash inflows                                    $50,680
2. Sarasota Corporation's:
a) Current Cash Debt Coverage = Cash from operating activities/Current liabilities
= $136,720/$36,360
= 3.76
b) Cash Debt Coverage = Cash from operating activities/Total liabilities
= $136,720/$186,360
= 0.73
c) Free Cash Flow = Cash from operating activities minus Capital expenditure
= $136,720 - 59,680
= $77,040
Explanation:
a) Data and Calculations:
Sarasota Corporation
Comparative Balance Sheets
As of December 31 2020 and 2019:
Assets                                  2020              2019           Increase     Decrease
Cash                               $ 72,680          $ 22,000        $50,680
Accounts receivable         84,360              68,680          15,680   
Inventory                          182,360             191,680                            $9,320
Land                                   73,360             112,680                            39,320
Equipment                      262,360           202,680         59,680
Accumulated Depreciation-Equipment
                                          (71,360)            (44,680)       26,680
Total                             $603,760         $553,040
Liabilities and Stockholders' Equity
Accounts payable        $ 36,360           $ 49,680                           13,320
Bonds payable               150,000           200,000                          50,000      
Common stock ($1 par) 214,000            164,000          50,000
Retained earnings        203,400            139,360
Total                            $603,760         $553,040
b) The decrease in bonds is not a cash flow.  The increase in Common Stock is not a cash flow.  The two are exchanges.  In calculating the free cash flow, the cash proceeds from sale of land were not taken into consideration because the sale was a one-off transaction and not part of the operating activities of Sarasota Corporation.