Question

Freeman, Inc., reported the following financial statements for the last two years.

2014 Income Statement
Sales	$	565,210
Cost of goods sold		274,020
Selling & administrative		124,732
Depreciation		54,575
EBIT	$	111,883
Interest		19,297
EBT	$	92,586
Taxes		48,145
Net income	$	44,441
Dividends	$	9,700
Addition to retained earnings	$	34,741

FREEMAN, INC. Balance Sheet as of December 31, 2013
Cash	$	13,330	Accounts payable	$	24,010
Accounts receivable		18,993
Inventory		13,795
Current assets	$	46,118	Long-term debt	$	136,700
Net fixed assets	$	344,427	Owners' equity	$	229,835
Total assets	$	390,545	Total liabilities and Owners' equity	$	390,545

FREEMAN, INC. Balance Sheet as of December 31, 2014
Cash	$	14,316	Accounts payable	$	26,980
Accounts receivable		21,098
Inventory		22,755
Current assets	$	58,169	Long-term debt	$	152,100
Net fixed assets	$	406,310	Owners' equity	$	285,399
Total assets	$	464,479	Total liabilities and Owners' equity	$	464,479

Requirement 1:

Calculate the operating cash flow. (Do not round intermediate calculations.)

Operating cash flow

$

Requirement 2:

Calculate the change in net working capital. (Do not round intermediate calculations.)

Change in net working capital

$

Requirement 3:

Calculate the net capital spending. (Do not round intermediate calculations.)

Net capital spending

$

Requirement 4:

Calculate the cash flow from assets. (Do not round intermediate calculations.Negative amount should be indicated by a minus sign.)

Cash flow from assets

$

Requirement 5:

Calculate the cash flow to creditors. (Do not round intermediate calculations.)

Cash flow to creditors

$

Requirement 6:

Calculate the cash flow to stockholders. (Do not round intermediate calculations. Negative amount should be indicated by a minus sign.)

Cash flow to stockholders

$

Answer 1

1]	OCF = EBIT+Depreciation-Taxes = 111883+54575-48145 =	$ 118,313
2]	Change in NWC = Ending NWC-Beginning NWC = (58169-26980)-(46118-24010) =	$          9,081
3]	Net capital spending = Ending NFA-Beginning NFA+Depreciation = 406310-344427+54575 =	$ 116,458
4]	CFFA = OCF-Change in NWC-Net capital spending = 118313-9081-116458 =	$        (7,226)
5]	Cash flow to creditors = Interest expense+(Beginning LT debt-Ending LT debt) = 19297+(136700-152100) =	$          3,897
6]	Cash flow to stockholders = Dividends+(Beginning owners' equity-Ending owners' equity-Addition to RE = 9700+229835-285399+34741 =	$ (11,123)
	VERIFICATION:
	CFFA = Cash flow to creditors+Cash flow to stockholders
	That is, -$7,226 = $3,897+(-$11,123)