Assume the following: CFFA = $10; Dividends = $3; Long-term debt paid off in the amount of $5; Interest paid = $3. Accor...
Assume the following: CFFA = $10; Dividends = $3; Long-term debt paid off in the amount of $5; Interest paid = $3. According to the Cash Flow Identity, did this company (a) issue or (b) repurchase stock and in what amount? Please explain how you find the answer!
Homework Answers
Surplus=CFFA-Dividends-Long term debt paid off-Interest paid=10-3-5-3=-1
As surplus is negative, we see that the company issued stock for $1 to finance this surplus
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