Question

You are researching Time Manufacturing and have found the following accounting statement of cash flows for the most recent year. You also know that the company paid $98.2 million in current taxes and had an interest expense of $48.2 million.

  

TIME MANUFACTURING Statement of Cash Flows ($ in millions)
Operations
Net income	$	175.0
Depreciation		94.2
Deferred taxes		19.2
Changes in assets and liabilities
Accounts receivable		–18.2
Inventories		22.2
Accounts payable		17.2
Accrued expenses		–9.2
Other		3.2
Total cash flow from operations	$	303.6
Investing activities
Acquisition of fixed assets	–$	213.0
Sale of fixed assets		23.2
Total cash flow from investing activities	–$	189.8
Financing activities
Retirement of long-term debt	–$	164.0
Proceeds from long-term debt sales		118.0
Dividends		–88.0
Repurchase of stock		–15.0
Proceeds from new stock issue		46.0
Total cash flow from financing activities	–$	103.0
Change in cash (on balance sheet)	$	10.8

1. Calculate the operating cash flow. (Do not round intermediate calculations. Enter your answer in millions, e.g., 10.2 million would be entered as 10.2. A negative answer should be indicated by a minus sign. Round your answer to one decimal place, e.g., 32.1.)

Operating cash flow             $    

2. Calculate the net capital spending. (Do not round intermediate calculations. Enter your answer in millions, e.g., 10.2 million would be entered as 10.2. A negative answer should be indicated by a minus sign. Round your answer to one decimal place, e.g., 32.1.)

Net capital spending             $    

3. Calculate the change in net working capital. (Do not round intermediate calculations. Enter your answer in millions, e.g., 10.2 million would be entered as 10.2. A negative answer should be indicated by a minus sign. Round your answer to one decimal place, e.g., 32.1.)

Change in net working capital             $  

4. Calculate the cash flow to creditors. (Do not round intermediate calculations. Enter your answer in millions, e.g., 10.2 million would be entered as 10.2. A negative answer should be indicated by a minus sign. Round your answer to one decimal place, e.g., 32.1.)

Cash flow to creditors             $  

5. Calculate the cash flow to stockholders. (Do not round intermediate calculations. Enter your answer in millions, e.g., 10 million would be entered as 10. A negative answer should be indicated by a minus sign. Round your answer to nearest whole dollar amount, e.g., 32.)

Cash flow to stockholders             $

Answer 1

1) Operating cash flows = Net Income + Interest + Depreciation = 175 + 48.2 + 94.2 = $317.4 million

2) Net capital spending = Cash flows from investing = $189.8 million

3) Change in net working capital = Account receivables + Inventories + Account payables = -18.2 + 22.2 + 17.2 = $21.2 million

4) Cash flows to creditors = Interest paid + Retirement of debt + New debt = 48.2 + 164 - 118 = $94.2 million

5) Cash Flows to stockholders = Dividends + Repurchase + Change in equity = 88 + 15 - 46 = $57 million