Question

During the past year, a company had cash flow to creditors, an operating cash flow, and...

During the past year, a company had cash flow to creditors, an operating cash flow, and net capital spending of $29,348, $65,239, and $26,720, respectively. The net working capital at the beginning of the year was $11,395 and it was $13,000 at the end of the year. What was the company's cash flow to stockholders during the year?

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Answer #1

The cash flow identity:

Cash flow from asset = cash flow to creditors + cash flow to shareholders

So, cash flow to shares holders = Cash flow from asset - cash flow to creditors

Cash flow to creditors = $29348

Cash flow from assets = operating cash flow - net capital spending - change in net working capital(NWC)

Change in NWC = year ending NWC - year Begining NWC = 13000 - 11395 = $1605

So,Cash flow from assets = $65239 - 26720 - 1605 = $36914

So, cash flow to shareholders = 36914 - 29348 = $7566

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