Answer:
a) The 2016 operating cash flow is $55,365
b) The 2016 cash flow to creditors is $13,800
c) The 2016 cash flow to stockholders is $3,850
d) If net fixed assets increased by $21,000 during the year, the addition to Net working capital is $3,965
Explanation:
EBIT for 2016 = sales $160,500 - costs $80,400 - other expenses $3,700 - depreciation expense $9,400 = $67,000
Assuming all above expenses (excepting depreciation expenses) were paid out by cash, then we can solve the followings:
a) What is the 2016 operating cash flow?
Operating cash flow = EBIT+Depreciation - Tax = $67,000 + $9,400- $21,035 = $55,365
b) What is the 2016 cash flow to creditors?
The cash flow to creditors = interest expense $6,900 + redeemed $6,900 in outstanding long-term debt = $13,800
c) What is the 2016 cash flow to stockholders?
The cash flow to stockholders = dividends $7,950 - $4,100 new equity issued = $3,850
d) If net fixed assets increased by $21,000 during the year, what was the addition to Net working capital?
Cash flow from assets = Cash flow to creditors + Cash flow to stockholders
$13,800 + $3,850 = $17,650
Net capital expenses = Depreciation + Increase in fixed assets = $9,400 + 21,000 = $30,400
Cash flow from assets = Operating cash flow - Change in NWC - Net capital expenses
⇔ $21,000 = $55,365 - Change in NWC - $30,400
-> Change in NWC = $55,365 - $30,400 - $21,000 = $3,965
