A company reports the amounts below in its statement of cash flows.

Net cash flow from investing activities $ 66,480

Net cash flow from financing activities $ 30,780

Total net cash flow $123,000

Current liabilities beginning of year $ 19,500

Current liabilities end of year $ 23,400

What is the company's operating cash flows to current liabilities ratio?

A. 1.19

B. 1.30

C. 1.20

D. 6.21

E. None of the above

C. 1.20

Explanation:

The total net cash flow consist of net cash flows from 3 activities namely; Operating activities, Investing activities and Financing activities.

Let the cash flows from operating activities be y

Therefore,

123,000 = y + 66,480 + 30,780

y = 123,000 - 66,480 - 30,780

y = 25,740

Current liabilities = (23,400 + 19,500) / 2

= 21450

The company's operating cash flows to current liabilities ratio

= 25,740 / 21450

= 1.20