Answer and Explanation:
The computations are shown below:
a) The net income is
= Sales - cost - other expenses - depreciation expenses - interest expense - taxes
= $305,000 - $176,000 - $8,900 - $18,700 - $12,900 - $23,345
= $65,155
b) For Operating Cash flow
= EBIDT - taxes
= Sales - costs - other exp - taxes
= $305,000 - $176,000 - $8,900 - $23,345
= $96,755
c) Cash flow to creditors is
= interest paid - net new borrowing
= $12,900 - (- $4,900)
= $17,800
d) Cash flow to stockholders is
= dividend paid - net new equity raised
= $19,500 - $6,400
= $13,100
e)If net fixed assets increased by $46000 during the year, the addition to Net working capital is
As we know that
Cash flow from assets = Operating cash flow - Change in NWC - Net capital spending ............... (equation 1)
Cash flow from assets
= Cash flow to creditors + Cash flow to stockholders
= $17,800 + $13,100
= $30,900
And, the operating cash flow = $96,755
Net Capital Spending is
= Dep + increase in FA
= $18,700 + $46,000
= 64700
Placing the values in Equation (1), we get
$30,900 = $96,755 - Change in NWC - $64,700
Change in NWC is
= $96,755 - $64,700 - $30,900
= $1,155
