Question

The underground cafe has an operating cash flow of $187,000 and a cash flow to creditors of $71,400 for the past year. During that time, the firm invested $28,000 in net working capital and incurred net capital spending of $47,900. What is the amount of the cash flow to stockholders for the last year?

Answer 1

Answer:

cash flow to stockholders = $39,700

Explanation:

Operating cash flow = $187,000

cash flow to creditors = $71,400

Net working capital = $28,000

Net capital spending =  $47,900

Cash flow to stockholders = ?

CFF = operating cash flow - net working capital - net capital spending

CFF = $187,000 - $28,000 - $47,900 = $111,100

CFF = cash flow to creditors + cash flow to stockholders

cash flow to stockholders = CFF - cash flow to creditors

cash flow to stockholders = $111,100 - $71,400 = $39,700

Hence $39,700 is the amount of the cash flow to stockholders for the last year.