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Red Barchetta Co. paid $27,635 in dividends and $28,500 in interest over the past year. During...

Red Barchetta Co. paid $27,635 in dividends and $28,500 in interest over the past year. During the year, net working capital increased from $13,578 to $18,294. The company purchased $42,330 in fixed assets and had a depreciation expense of $16,940. During the year, the company issued $25,075 in new equity and paid off $21,105 in long-term debt. What was the company's cash flow from assets?

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Answer #1

​​​​​​COMPUTATION OF CASH FLOW FROM ASSETS OF RED BARCHETTA Co.

Step1:- Computation of cash flow to creditors

Cash flow to creditors= Interest paid-(closing long term debt-opening log term debt).

= $28,500-(0-21,105)

= $28,500+21,105

= $49,605

Hence the cash flow to creditors is $49,605

Step 2:- Computation of cash flow to stockholders

Cash flow to stockholders=Dividend paid-new equity raised

=$27,635-25075

=$2,560

Hence the cash flow to stockholders is $2,560

​​​Step 3:- Computation of cash flow from assets

Cash flow from assets=cash flow to creditors+cash flow to stockholders

=$49,605+$2,560

=$52,165

Hence the cash flow from assets is $52,165.

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