Question

Weiland Co. shows the following information on its 2019 income statement: sales = $162,500; costs = $80,000; other expenses = $3,300; depreciation expense = $9,000; interest expense = $6,500; taxes = $22,295; dividends = $8,150. In addition, you're told that the firm issued $4,500 in new equity during 2019 and redeemed $7,700 in outstanding long-term debt. a. What is the 2019 operating cash flow? b. What is the 2019 cash flow to creditors? c. What is the 2019 cash flow to stockholders? d. If net fixed assets increased by $21,200 during the year, what was the addition to NWC?

Answer 1

Answer:

a. 2019 Operating cash flow

Welland Co. Operating Cash Flow for 2019

Particular                              Amount $

Sales                                            162500

Cost of goods sold    80000

Other Expenses         3300

Depreciation               9000         92,300

EBIT                                               70200

Less: Taxes                                   22295

Add :Depreciation                         9000

Operating Cash Flow                 $56905

b. Cash flow to creditors

Interest paid                    6500

Add: Loan raised             7700

Cash flow to creditors      14200

c. Cash flow to Stockholders

Dividends Paid                         8150

Less: Net Equity Raised          4500

Cash flow to Stockholders   $3650

d. Change in Net working Capital = Change in Current Assets - Change in  Liabilities

Figures for Current Asset was not given, rather the Net Fixed asset is given $21,100 which is not a current asset.