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Documenti - Word 0 - X AutoSave Off File Home 5 Insert 0 5 Design Layout 0 Share References Mailings Review View Help Tell me what you want to do Cash Flow From Assets (CFFA) Problems: Calculate each step of the cash flow from assets: (1) Operating Cash Flow, (2) Net Capital Spending, (3) Changes in Net Working Capital, (4) Cash Flow from Assets, (5) Cash Flow to Creditors, and (6) Cash Flow to Stockholders. Use the examples in the presentation as a guide. 2. CFFA Problem Calculate each step of the cash flow from assets based on the following information. 2018 2017 Balance Sheet: Current Assets Current Liabilities Net Fixed Assets Long-Term Debt Common Stock $ 4,571 1,532 9,907 $ 6,027 4,194 8,821 9,800 7,000 10,650 7,500 Income Statement: Depreciation Expense EBIT $ 822 3,255 Interest Expense 1,158 Taxes 555 Other Information: Dividends 600 Page 1 of 1 115 words - English (United States) DE E-— + 110% E! w EN 10:28 AM 2/6/2020

Answer 1

Solution:

Calculation of Cash Flows from Assets (CFFA) Method

1. Operating Cash Flows      = EBIT + Depreciation – Taxes

   = 3,255 + 822 – 555

   = $ 3,522

2. Net Capital Spending       = Closing Fixed Assets – Opening Fixed Assets + Depreciation

   = 9,907 – 8,821 + 822

   = $ 1,908

3. Changes in Net WC    = Closing Net WC – Opening Net WC

   = (Closing CA – Closing CL) – (Opening CA – Opening CL)

   = (4,571 – 1,532) – (6,027 – 4,194)

   = 3,039 – 1,833

   = $ 1,206

4. Cash Flow from Assets     = Operating Cash Flows – Net Capital Spending – Changes in Net WC

  = $ 3,522 - $ 1,908 - $ 1,206

  = $ 408

5. Cash Flow to Creditors    = Interest paid – Net New Borrowings

= 1,158 – 850

= $ 308

6. Cash Flow to Stockholders = Dividend paid – Net new Equity

   = 600 – 500

   = $ 100