Selected data from the financial statements are provided below:

-Refer to Rainsoft Company. What is the operating cash flow ratio for 2021?
A)4.0625
B)0.246
C)0.147
D)0.072

Question

Selected data from the financial statements are provided below:
 
-Refer to Rainsoft Company. What is the operating cash flow ratio for 2021?
A)4.0625 
B)0.246 
C)0.147 
D)0.072

Quizplus · Accepted Answer

The operating cash flow ratio is calculated as operating cash flow divided by current liabilities.

Operational cash flow for 2021 can be calculated as: 
Net cash provided by operating activities - Taxes = $660,000 - $60,000 = $600,000

The current liability for 2021 is given as $2,440,000.

So, the operating cash flow ratio for 2021 is:

Operating cash flow ratio = Operating cash flow / Current liabilities 
= $600,000 / $2,440,000 
= 0.24590163934, which can be rounded to 0.246.

Therefore, the correct answer is (B).

Selected Data from the Financial Statements Are Provided Below