Smart Fruit Inns Inc. has asked you as a financial analyst and provided you with

Question

Smart Fruit Inns Inc. has asked you as a financial analyst and provided you with the following summary financial information. For some reason, unfortunately, the income statement and balance sheets are incomplete. There is no information for items above EBIT in the income statement, and some numbers in the simplified balance sheets are also missing. Moreover, you have no information about depreciation, although you know that the company must have included it in the income statement You also know that the company did not pay any principal back to the creditors in Year 2002 and Year 2003, and there was no stock repurchased/sold during these two years. To help them, you need to calculate the following: Note: Please write down the formula while answering the first six parts of the question, and give detailed solutions. If you only give a number for any part, marks for that particular part will be recorded ZERO. Cash flow to creditors Cash Flow to stockholders Cash flow from assets The 2004 Net Working Capital (NWC) and additions to net working capital (NWC) The 2003 equity and the 2004 equity The difference between the source of cash and the use of cash

Explanation / Answer

a) Cash flow to creditor = Interest Expense- Ending Long-term Debt+ Beginning Long-term Debt

Cash flow to creditor = 20 - 420 + 400

Cash flow to creditor = 0

b) Cash Flow to stockholder = Dividends Paid- (Ending Equity - Beginning Equity)

Beginning Equity = Total Asset - Long term Debt

Beginning Equity = 1290-400

Beginning Equity = $ 890

Ending Equity = Beginning Equity + Addition to Retained Earning + Equity issued

Ending Equity = 890 + 100 +0

Ending Equity = 990

Cash Flow to stockholder = 8 - (990-890)

Cash Flow to stockholder = - 92

c) Cash Flow from Asset = Cash flow to creditor + Cash Flow to stockholder

Cash Flow from Asset = 0 - 92

Cash Flow from Asset = - 92

d) 2004 Total Asset = Ending Equity + Long Term Debt

2004 Total Asset = 990 + 420

2004 Total Asset = $ 1410

Net Working Capital 2004 = 2004 Total Asset - Net Fixed Asset

Net Working Capital 2004 = 1410-1100

Net Working Capital 2004 = 310

Addition to working Capital = Net Working Capital 2004 - Net Working Capital 2003

Addition to working Capital = 310-305

Addition to working Capital = $ 5

e)

2003 Equity = Total Asset - Long term Debt

2003 Equity = 1290-400

2003 Equity = $ 890

2004 Equity = 2003 Equity = + Addition to Retained Earning + Equity issued

2004 Equity = 890 + 100 +0

2004 Equity = 990

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