Answer:
a. $62,915
b. $17,000
c. $5,500
d. $2,915
Explanation:
a. The operating cash flow is shown below:
= EBIT + Depreciation - Income tax expense
where,
EBIT = Sales - cost of good sold - other expenses - depreciation expense
= $235,000 - $147,000 - $7,900 - $17,500
= $62,600
And all other items would remain same
Now put these values to the above formula
So, the value would equal to
= $62,600 + $17,500 - $17,185
= $62,915
b. The computation of the cash flow to creditors is shown below:
= Interest expense - ending balance of long term debt + beginning balance of long term debt
= $13,500 - (-$3,500)
= $17,000
c. The computation of the cash flow to stockholder is shown below:
= Dividend expense - new equity
= $10,500 - $5,000
= $5,500
d. Computation of the addition to the net working capital is shown below:
The computation of the cash flow from assets = cash flow to creditors + cash flow to stockholders
= $17,000 + $5,500
= $22,500
Now addition to NWC = Operating cash flow - cash flow from assets - net capital spending
= $62,915 - $22,500 - ($20,000 + $17,500)
= $2,915
