Question

Freeman, Inc., reported the following financial statements for the last two years.

FREEMAN, INC.
2017 Income Statement
Sales	$	565,220
Cost of goods sold		274,015
Selling & administrative		124,731
Depreciation		54,574
EBIT	$	111,900
Interest		19,298
EBT	$	92,602
Taxes		48,153
Net income	$	44,449
Dividends	$	9,800
Addition to retained earnings	$	34,649

FREEMAN, INC. Balance Sheet as of December 31, 2016
Cash	$	13,340		Accounts payable	$	24,008
Accounts receivable		18,992
Inventory		13,796
Current assets	$	46,128		Long-term debt		136,600
Net fixed assets		344,428		Owners' equity		229,948
Total assets	$	390,556		Total liabilities and owners' equity	$	390,556

FREEMAN, INC. Balance Sheet as of December 31, 2017
Cash	$	14,326		Accounts payable	$	26,982
Accounts receivable		21,097
Inventory		22,756
Current assets	$	58,179		Long-term debt		152,200
Net fixed assets		406,309		Owners' equity		285,306
Total assets	$	464,488		Total liabilities and owners' equity	$	464,488

Requirement 1:

Calculate the operating cash flow. (Do not round intermediate calculations.)

Operating cash flow              $

Requirement 2:

Calculate the change in net working capital. (Do not round intermediate calculations.)

Change in net working capital             $

Requirement 3:

Calculate the net capital spending. (Do not round intermediate calculations.)

Net capital spending             $

Requirement 4:

Calculate the cash flow from assets. (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.)

Cash flow from assets             $

Requirement 5:

Calculate the cash flow to creditors. (Do not round intermediate calculations.)

Cash flow to creditors             $

Requirement 6:

Calculate the cash flow to stockholders. (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.)

Cash flow to stockholders             $

Answer 1

Operating cash flow (OCF) = EBIT + Depreciation - Taxes =111900+54574-48153 118,321 a) Operating cash flow (OCF) $ Change in NWC OCF-Net capital spending-cash flow from Assets =118321-116455-7211 $5,345 b) Change in NWC Net capital spending Increase in NFA + Depreciation =(406309-344428)+54574 116,455 C) Net capital spending Cash flow from Assets CFC + CFS =10909-3698 $7,211 d) Cash flow from Assets Cash flow to creditors (CFC) = Interest - Net new LTD =19298-(152200-136600) e) Cash flow to creditors (CFC) $ 3,698 Cash flow to stockholders (CFS) = Dividends - Net new equity =9800-(285306-229948-34649) $10,909 f) Cash flow to stockholders (CFS)

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