Whistler's sales for this past year were $21,381. The interest expense was $248, costs of goods sold were $9,784, selling and general expenses were $1,208, depreciation was $811, and the addition to retained earnings was $325. The firm sold $500 of new stock shares and repurchased $125 of outstanding shares.
What was the cash flow to stockholders if the tax rate was 34 percent?
Taxable Income = Sales - Cost of Goods Sold - Selling and
General Expenses - Depreciation - Interest
Taxable Income = $21,381 - $9,784 - $1,208 - $811 - $248
Taxable Income = $9,330
Taxes = Taxable Income * 34%
Taxes = $9,330 * 34%
Taxes = $3,172.20
Net Income = Taxable Income – Taxes
Net Income = $9,330 - $3,172.20
Net Income = $6,157.80
Addition to Retained Earnings = Net Income - Dividends
$325 = $6,157.80 - Dividends
Dividends = $5,832.80
Net New Equity = Issuance of Shares - Shares Repurchased
Net New Equity = $500 - $125
Net New Equity = $375
Cash Flows to Stockholders = Dividends - Net New Equity
Cash Flows to Stockholders = $5,832.80 - $375
Cash Flows to Stockholders = $5,457.80
Whistler's sales for this past year were $21,381. The interest expense was $248, costs of goods...
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