Question

For the past year, lp gas, inc., had cash flow from assets of $38,100 of which $21,500 flowed to the firm's stockholders. the interest paid was $2,300. what is the amount of the net new borrowing?

Answer 1

If for the past year, lp gas, inc., had cash flow from assets of $38,100 of which $21,500 flowed to the firm's stockholders. the interest paid was $2,300. The amount of the net new borrowing is:-$14,300.

Net new borrowing

First step is to calculate the  cash flow to creditors

Cash flow to creditors = $38,100 -$21,500

Cash flow to creditors= $16,600

Second step is to calculate the net new borrowing using this formula

Net new borrowing =Interest paid -Cash flow to creditors

Let plug in the formula

Net new borrowing = $2,300 - 16,600

Net new borrowing  = -$14,300

Therefore If for the past year, lp gas, inc., had cash flow from assets of $38,100 of which $21,500 flowed to the firm's stockholders. the interest paid was $2,300. The amount of the net new borrowing is:-$14,300.

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