Question

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

During the past year, a company had cash flow to stockholders, an operating cash flow, and net capital spending of $15,028, $34,894, and $14,400, respectively. The net working capital at the beginning of the year was $5,952 and it was $6,980 at the end of the year. What was the company's cash flow to creditors during the year?

$4,438

$1,028

$6,494

$5,466

$2,692

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Answer #1

Answer: The correct answer is $4,438

Change in Net Working Capital = Ending Working Capital – Beginning Working Capital
Change in Net Working Capital = $6,980 - $5,952
Change in Net Working Capital = $1,028

Cash Flow from Assets = Operating Cash Flow – Net Capital Spending - Change in Working Capital
Cash Flow from Assets = $34,894 - $14,400 - $1,028
Cash Flow from Assets = $19,466

Cash Flow from Creditors = Cash Flow from Assets – Cash flow to Stockholders
Cash Flow from Creditors = $19,466 - $15,028
Cash Flow from Creditors = $4,438

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