Please, try not to use Excel or any Computer to solve this problem. Use formulas, math and written explanation to solve the problem. Thanks.
Answer a.
2018:
Owners’ Equity = Total Assets - Total Liabilities
Owners’ Equity = (Current Assets + Net Fixed Assets) - (Current
Liabilities + Long-term Debt)
Owners’ Equity = ($1,212 + $4,980) - ($489 + $2,639)
Owners’ Equity = $3,064
2019:
Owners’ Equity = Total Assets - Total Liabilities
Owners’ Equity = (Current Assets + Net Fixed Assets) - (Current
Liabilities + Long-term Debt)
Owners’ Equity = ($1,315 + $5,999) - ($547 + $2,807)
Owners’ Equity = $3,960
Answer b.
Change in Net Working Capital = Net Working Capital, 2019 - Net
Working Capital, 2018
Change in Net Working Capital = (Current Assets, 2019 - Current
Liabilities, 2019) - (Current Assets, 2018 - Current Liabilities,
2018)
Change in Net Working Capital = ($1,315 - $547) - ($1,212 -
$489)
Change in Net Working Capital = $45
Answer c-1.
Net Capital Spending = Net Fixed Assets, 2019 + Depreciation -
Net Fixed Assets, 2018
Net Capital Spending = $5,999 + $1,369 - $4,980
Net Capital Spending = $2,388
Net Capital Spending = Purchase of Fixed Assets - Sale of Fixed
Assets
$2,388 = $2,508 - Sale of Fixed Assets
Sale of Fixed Assets = $120
Answer c-2.
EBIT = Sales - Costs - Depreciation
EBIT = $15,346 - $7,144 - $1,369
EBIT = $6,833
EBT = EBIT - Interest Paid
EBT = $6,833 - $392
EBT = $6,441
Taxes = EBT * Tax Rate
Taxes = $6,441 * 21%
Taxes = $1,353
Operating Cash Flow = EBIT + Depreciation - Taxes
Operating Cash Flow = $6,833 + $1,369 - $1,353
Operating Cash Flow = $6,849
Cash Flow from Assets = Operating Cash Flow - Net Capital
Spending - Change in Net Working Capital
Cash Flow from Assets = $6,849 - $2,388 - $45
Cash Flow from Assets = $4,416
Answer d-1.
Net New Long-term Debt = Long-term Debt, 2019 - Long-term Debt,
2018
Net New Long-term Debt = $2,807 - $2,639
Net New Long-term Debt = $168
Net New Long-term Debt = Long-term Debt raised - Long-term Debt
repaid
$168 = $509 - Long-term Debt repaid
Long-term Debt repaid = $341
Answer d-2.
Cash Flow to Creditors = Interest Paid - Net New Long-term
Debt
Cash Flow to Creditors = $392 - $168
Cash Flow to Creditors = $224
Please, try not to use Excel or any Computer to solve this problem. Use formulas, math...
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