Question

2015 2016 Sales $3,500 Cost of Goods Sold $1,800 Depreciation Expense $875 Interest Expense $425 Current...

2015 2016
Sales $3,500
Cost of Goods Sold $1,800
Depreciation Expense $875
Interest Expense $425
Current Assets $2,000 $2,500
Total Fixed Assets $6,200 $7,300
Accumulated Depreciation $1,300 This can be determined from the information given
Current Liabilities $1,300 $1,500
Long-term Debt $3,500 $3,700
Common Stock $1,200 This can be determined from the information given

Calculate Operating Cash Flow, Net Capital Spending, Change in Net Working Capital, Cash Flow to Creditors, and Cash Flow to Shareholders.

Please show all steps. Thank you.

Business   Accounting   
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Answer #1

Operating Cashflow = Sales - Operarting expenses = 3500 - 1800 = 1700

Net Capital Spending = Ending fixed assets - Beginning fixed assets + Depreciation = 7300 - 6200 + 875 = 1975

Change in Net Working Capital = 2016 ( Current Assets - Current Liabilities) - 2015 (Current Assets - Current Liabilities ) = (2500 - 1500 ) - ( 2000 - 1300 ) = 300

Cash Flow to Creditors = Interest - (Ending Long Term Debt - Beginning Long Term Debt)

                                    = 425 - ( 3700 -3500 ) = 225

Cash Flow to Shareholders = Dividend paid - Net Equity

2016 Equity = Total Assets - Total Debt = (2500 + 7300 - 1300 - 875 ) - 1500 - 3700 = 2425

Cash Flow to Shareholders = 0 - (2425 - 1200 ) = -1225

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