Question

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Answer 1

Graffiti Advertising, Inc. Requirement 1 Operating Cashflow = EBIT + Depreciation - Taxes Operating Cashflow = 120992 +54558 - 40520 = 135030 Requirement 2 Change in Net Working Capital = Ending Net Working Capital - Beginning Net Working Capital End Current Assets 58339 Current Liabilities 27014 Net Working Capital 31325 Change = 29325 - 22312 = 9013 Beginning 46288 23976 22312 9013 Requirement 3 Net Capital Spending = Net Fixed asset (end) - Net Fixed Assets (Beg.) + Depreciation Net Capital Spending = 406293 - 344966 +54558 = 115885 Requirement 4 Cashflow from Assets = Operating Cashflow - Change in Networking capital - Net Capital spending Cashflow from Assets = 135030 - 9013 - 115885 = 10132 Requirement 5 Cashflow to Creditors = Interest Paid - New long term debt Cashflow to Creditors = Interest Paid - (long term debt ending - long term debt beginning) Cashflow to Creditors = 19692 - (153800 - 135360) = 1252 Requirement 6 New Equity = Ending Equity - Beginning Equity - Addition to Retained Earnings New Equity = 283818 - 231918 - 49380 = 2520 Cashfow to Stockholders = Dividends paid - Net new Equity = 11400 - 2520 = 8880 Cashflow Identity is : Cashflow from Assets = Cashflow to Creditors + Cashflow to stockholders 10132 = 1252 + 8880