Question

Company Z had the following Balance Sheet in 2016 and 2017. If firm Z also has...

Company Z had the following Balance Sheet in 2016 and 2017. If firm Z also has an Operating Cash Flow of $2080 and depreciation of $445, calculate the company’s Cash Flow from assets using the information on the Balance Sheet:

Balance Sheets
2016 2017 2016 2017
Cash 262 414 Accounts payable 2720 2570
Accounts Receivable 2748 3046 Notes payable 100 0
Inventory 3275 3850 Total Current Liabilities 2820 2570
Total Current Assets 6285 7310 Long-term debt 7875 8100
Net fixed assets     10960     11000 Common stock 5060 5250
Retained earnings 1490 2390
Total assets 17245 18310 Total Liab+Equity 17245 18310


Select one:

a. 199

b. 272

c. 296

d. 441

e. 320

Homework Answers

Answer #1

Step 1: Operating Cash flow

$2080

Step 2: Capital Spending

Capital Spending = Ending Net Fixed Asset - Beginning Net Fixed Asset+Depreciation

= 11000-10960+445

= $485

Step 3: Addition to NWC

Ending NWC = Ending CA-Ending CL

= 7310-2570

= $4740

Beginning NWC = Beginning CA-Beginning CL

= 6285-2820

= $3465

Addition to NWC = Ending NWC -Beginning NWC

= 4740-3465

= $1275

Step 4: Cash flow from Assets

Cash flow from Assets = Operating Cash flow-Capital Spending-Addition to NWC

= 2080-485-1275

= $320

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