Question

The following information should be used for questions #3 through #5: PLEASE SHOW STEPS Galaxy Interiors 2011 Income Statement ($ in millions) Net sales $21,415 Cost of goods sold 16,408 Depreciation 1,611 Earnings before interest and taxes 3,396 Interest paid 1,282 Taxable Income $ 2,114 Less: Taxes 740 Net income $ 1,374 Galaxy Interiors 2010 and 2011 Balance Sheets 2010 2011 2010 2011 Cash $ 668 $ 297 Accounts payable $1,694 $ 1,532 Accounts receivable 1,611 1,527 Notes payable 2,500 0 Inventory 3,848 2,947 Total $4,194 $ 1,532 Total $ 6,127 $ 4,771 Long-term debt 9,800 10,650 Net fixed assets 17,489 17,107 Common stock 7,500 7,000 Retained earnings 2,122 2,696 Total assets $23,616 $21,878 Total liabilities. & equity $23,616 $21,878 1) What is the operating cash flow for 2011? 2) What is the net working capital for 2011? 3) What is the change in net working capital from 2010 to 2011?

Answer 1

Operating cashflows:
Net Income after tax			1374
Add: Interest			1282
Add: Depreciation			1611
Operating cashflows:			4267
Net Working Capital = Current assets - Current liabilities
			2011	2010
Cash			297	668
Accounts receivable			1527	1611
Inventory			2947	3848
Total Current assets			4771	6127
Current liabilities
Accounts payable			1532	1694
Notes Payable			0	2500
Total current liabilities			1532	4194
Working capital			3239	1933
Working capital of 2011 = 3239
Net Increase in Working capital = 3239-1933 = 1306