Question

2016 2017 2016 2017 Current assets $ 934 $ 984 Current liabilities $ 375 $ 398 Net fixed assets 3,897 4,576 Long-term debt 2,021 2,167 WESTON ENTERPRISES 2017 Income Statement Sales $ 11,770 Costs 5,710 Depreciation 1,060 Interest paid 180 a. What was owners' equity for 2016 and 2017? (Do not round intermediate calculations.) Owners' equity 2016 $ Owners' equity 2017 $ b. What was the change in net working capital for 2017? (Do not round intermediate calculations.) Change in NWC $ c-1 In 2017, the company purchased $1,845 in new fixed assets. How much in fixed assets did the company sell? (Do not round intermediate calculations.) Fixed assets sold $ c-2 In 2017, the company purchased $1,845 in new fixed assets. What was the cash flow from assets for the year? The tax rate is 35 percent. (Do not round intermediate calculations.) Cash flow from assets $ d-1 During 2017, the company raised $400 in new long-term debt. How much long-term debt must the company have paid off during the year? (Do not round intermediate calculations.) Debt retired $ d-2 During 2017, the company raised $400 in new long-term debt. What was the cash flow to creditors? (Do not round intermediate calculations.) Cash flow to creditors $

Answer 1

		2016	2017
	Current assets	984	984
	Net fixed assets	3897	4576
	Total assets	4881	5560
	Current liabilities	375	378
	Long term debt	2021	2167
	Total debt	2396	2545
	Equity (Plug in figure)	2485	3015
	Total liabilities and Equity	4881	5560
	Sales		11770
	Costs		5710
	Depreciation		1060
	EBIT		5000
	Interest paid		180
	EBT		4820
	Tax at 35%		1687
	NI		3133
	Dividends (3133-530)		2603
	Addition to retained earnings (3015-2485)		530
	ANSWERS:
a)	Owners' equity	2485	3015
b)	Change in NWC = (984-378)-(984-375) =		-3
c-1)	Fixed assets sold = (3897-1060+1845)-4576 =		106
c-2)	Cash flow from assets = OCF-Net capital spending-Change in NWC
	OCF = NI+Depreciation+Interest = 3133+180+1060 =		4373
	Cash flow from assets = 4373-(1845-106)+3 =		2637
d-1)	LT debt paid off = (2021+400)-2167 =		254
	Cash flow to creditors = 254+180-400 =		34
	Cash flow to stockholders		2603
	CHECK:
	Cash flow from assets = Cash flow to creditors + Cash flow to stockholders
	2637 = 34 + 2603