Interpret Cash Flow Patterns a

Interpret Cash Flow Patterns and Ratios The following information is taken from the 2016 Form 10-K for each of the following technology companies.


a. Compute the operating cash flow to current liabilities ratio. Compared to the average of 0.5, assess as

low, medium, or high, each company’s ability to settle liabilities as they come due.

b. Compute the operating cash flow to CAPEX ratio. Compared to the rule of thumb of 1.0, assess the

company’s solvency as either low, medium, or high.

c. All three companies are in the mature stage of its life cycle. Consider the graphic shown earlier in the

appendix that graphs the cash flow patterns. Use the graphic to rank the companies from least mature to

most mature.

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