Question

Assets Liabilities and Owners' Equity 2014 2015 2014 2015 Current Assets 1,000.00 $1,089.00 Current Liabilities $402.00 $451.00 Net Fixed Assets 4,144.00 $4,990.00Long-term Debt $2,190.00 $2,329.00 Income Statement 2015 12,751.00 $5,946.00 Depreciation1,136.00 Interest Paid$323.00 Sales Costs 1, What is owners' equity for 2014 and 2015? 2. What is the change in net working capital for 2015? 3, Assume that the company purchased $2,080 in new fixed assets in 2015, Assume the tax rate is 35% o How much in fixed assets did the company sell? o What is the cash flow from assets that year?

Answer 1

1.

	2014	2015
Owners Equity	$ 2,552	$ 3,299

2.

	2014	2015	Change in Working Capital
Current Assets	$ 1,000	$ 1,089
Less : Current Liabilities	402	451
Net Working Capital	$ 598	$ 638	$ 40

3. Fixed assets sold during 2015 = $ 4,144 + $ 2,080 - $ 1,136 -- $ 4,990 = $ 98.

4. Cash flow from assets: $ 2,912.

Workings:

Net capital spending = Fixed assets purchased - Fixed Assets sold = $ 2,080 - $ 98 = $ 1,982.

Operating cash flows = EBIT + Depreciation - Taxes = $ 5,669 + $ 1,136 - $ 1,871 = $ 4,934.

Cash flow from assets = Operating cash flows - Net Capital Spending - Net change in NWC = $ 4,934 - $ 1,982 - $ 40 = $ 2,912.