Question

QUESTION 1 Use the following financial statements to answer Questions 1 - 17. Kramerica Industries (KI) 2015 Income Statement Salos $422.045 Cost of goods sold 291,090 Depreciation 37063 Earnings before interest and taxes $83,902 Interest expense 16,400 Earnings before taxes $77,502 Taxes 27,126 Net Income $50,376 Dividends Additions to retained earnings Kramerica Industries (KD) 2014 and 2015 Balance Sheets 2015 | $79,106 Acounts payable 18,282 Long-term debt 2014 2014 2015 $69,426 110,000 $81.722 95.000 $26,450 13,693 Accounts receivable Inventory Net foved asset 46,000 45,000 27,931 357,165 32,586 Common stock 398,345 Retained earnings 223.517 253 893 $425,239 Total assets $478,319 Total abilities and $478,319 $425.239 Ki's cash flow from assets in 2015 is a $49,300 b.$23,800 $21,400 d. 547,600 Click Save and Submit to save and surroir. Click Save All Armers to save all answers $

Answer 1

Answer:

Correct answer is:

c. $21,400

Explanation:

Tax rate = 27126 / 77502 = 35%

Capital expenditure = 398345 + 37053 - 357165 = $78,233

Changes in net working capital = (29106 + 18282 +32586 - 69426) - (26450 + 13693 + 27931 - 61722)

= $4,196

Cash flow from Assets = EBIT - Tax + Depreciation - Net capital expenditure - Net change working capital

= 93902 - 27126 + 37053 - 78233 - 4196

= $21,400

Hence:

Option c is correct and other options a, b and d are incorrect.