Question

: Schwert Corp, shows the following information on its 2017 income statement: sales= $225,000; costs=$103,200; other expenses =$6,100; depreciation expense= $15,300; interest expense=$11,200; taxes =$31,227; dividends =$18,100, In addition , you’re told that the firm issued $6,000 in new equity during 2017, and redeemed $8,500, in outstanding long-term debt.

a. What was the 2017 operating cash flow?

b.What was the 2017 cash flow to creditors?

c.What was the 2017 cash flow to stockholders?

d. If net fixed assets increased by $33,000 during the year, what was the addition to net working capital?

Answer 1

Cash flow to creditors (CFC) Cash flow to creditors Interest-New long term debt 19,700 =11200-(-8500) Less: Less: Less: Cash flow to stockholders (CFS) Cash flow to stockholders $ Income Statement Sales $ Costs $ Other expenses $ Depreciation $ EBIT $ Interest $ |ЕВТ $ $ Net income $ Dividends $ Retained Earnings $ 225,000 103,200 6,100 15,300 100,400 11,200 89,200 31,227 57,973 18,100 39,873 Dividends - Net new equity 12,100 =18100-6000 Less: Less: Tax Cash flow from Assets (CFFA) Cash flow from Assets (CFFA) $ CFC + CFS 31,800 =19700+12100 Less: Operating cash flows Operating cash flows Addition to NWC Addition to NWC OCF-NCS-CFFA 4,373 =84473-48300-31800 EBIT-Taxes+Depreciation 84,473 =100400-31227+15300 Net capital spending (NCS) Net capital spending (NCS) Increase in NFA + Depreciation 48,300 =33000+15300 Operating cash flows $84,473 Cash flow to creditors $19,700 Cash flow to stockholders $ 12,100 Addition to NWC $ 4,373

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