Compute free cash flow and the cash flow adequacy ratio

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Reference no: EM13943821

ANALYZING THE STATEMENT OF CASH FLOWS

Rollins Inc. is considering expanding its operations into different regions of the country; however this expansion will require significant cash flow as well as additional financing. Rollins reported the following information for 2009: cash provided by operating activ- ities, $425,000; cash provided by investing activities, $115,000; average debt maturing over the next five years, $380,000; capital expenditures, $240,000; dividends, $40,000.

Required:

Compute free cash flow and the cash flow adequacy ratio. Comment on Rollins' ability to expand its operations.

Reference no: EM13943821

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