Schwert Corp. shows the following information on its 2015
statement of comprehensive income: sales = $167,000; costs =
$91,000; other expenses = $5,400; depreciation expense = $8,000;
interest expense = $11,000; taxes = $18,060; dividends =
$9,500.
In addition, you’re told that the firm issued $7,250 in new equity
during 2015 and redeemed$7,100 in outstanding long-term debt.
1. What is the 2015 operating cash flow?
2. What is the 2015 cash flow to creditors?
3. What is the 2015 cash flow to shareholders?
4. If net fixed assets increased by $22,400 during the year, what
was the addition to net working capital?
1. OCF for 2015
OCF = Sales - Cost - Other Expenses - Taxes
OCF = 167000 - 91000 - 5400 - 18060
OCF for 2015 = $52540
2. 2015 cash flow to creditors
2015 cash flow to creditors = Interest + Net New Long Term Debt redeemed
2015 cash flow to creditors = $11000 + 7100
2015 cash flow to creditors = $18100
3. 2015 cash flow to shareholders
2015 cash flow to shareholders = Dividends - Equity Issued
2015 cash flow to shareholders = 9500 - 7250
2015 cash flow to shareholders = $2250
4. Addition to Net Working Capital
Cash Flow from Assets = Operating Cash Flow - Net Capital Spending - Change in NWC
Cash Flow to Creditors + Cash Flow to Shareholder = Operating Cash Flow - Increase in Fixed Assets - Depreciation - Change in NWC
18100 + 2250 = 52540 - 22400 - 8000 - Change in NWC
Addition to net working capital = $1790
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