Question

Weiland Co shows the following information on its 2019 income statement sales - $178,000, costs = $103,600; other expenses = $5,100; depreciation expense = $12,100; Interest expense = $8.900; taxes = $12,705; dividends = $10.143. In addition, you're told that the firm issued $2.900 in new equity during 2019 and redeemed $4,000 in outstanding long-term debt. a. What is the 2019 operating cash flow? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g. 32.) b. WWhat is the 2019 cash flow to creditors? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.). c. What is the 2019 cash flow to stockholders? (Do not round Intermediate calculations and round your answer to the nearest whole number, e.g. 32.) d. If net fixed assets increased by $23,140 during the year, what was the addition to NWC? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Reference a: Operating cash flow bilCash flow to creditors c. Cash flow to stockholders d. Addition to net working capital

Answer 1

a) Operating cash flow = Earning before interest & Tax (EBIT) + Depreciation - Taxes = (sales - costs - other expenses - depreciation) + Depreciation - Taxes = ($178,000 - $103.600 - $5,100 - $12,100) + $12.100 - $12.705 = $57,200 + $12.100 - $12.705 $56,595 b) Cash flow to creditors = Redeemed long term debt + Interest = $4,000+ $8,900 = $12,900 c) Cash flow to stockholder's = Dividends paid - Issued new equity = $10.143 - $2.900 = $7,243 d) Addition to net working capital Cash flow to assets = Operating cash flow - Net capital spending - Change in Net working capital So. Change in Net working capital = Operating cash flow - Net capital spending - Cash flow to assets = $56,595 - $20.143 - $35,240 = $1,212 Workings: Cash flow to assets = Cash flow to creditors + Cash flow to stockholder's = $12.900 + $7.243 = $20.143 Net Working capital = Increase in Net Fixed assets + Depreciation = $23.140 + $12.100 $35,240