se the following information to answer this question. Windswept, Inc. Current In
ID: 2615552 • Letter: S
Question
se the following information to answer this question.
Windswept, Inc. Current Income Statement ($ in millions)
Net sales $ 10,000
Less: Cost of goods sold 7,700
Less: Depreciation
345
Earnings before interest and taxes $ 1,955
Less: Interest paid
90
Taxable Income $ 1,865
Less: Taxes
560
Net income
$ 1,305
Dividends $ 1,055
Windswept, Inc. Balance Sheets ($ in millions)
Last Year
This Year
Last Year
This Year
Cash $ 320 $ 335 Accounts payable $ 1,760 $ 1,595
Accounts rec. 1,010 910 Long-term debt 1,020 1,480
Inventory
1,780
1,720
Common stock $ 3,260 $ 3,090
Total $ 3,110 $ 2,965 Retained earnings
600
850
Net fixed assets
3,530
4,050
Total assets
$ 6,640
$ 7,015
Total liab. & equity
$ 6,640
$ 7,015
What is the cash flow to creditors?
$550 million
$550 million
$2,300 million
$-370 million
$1,225 million
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Explanation / Answer
CASHFLOW TO CREDITORS = INTEREST PAID - NET NEW BORROWINGS ( ALSO CALLED CHANGE IN LONG TERM DEBT)
CASHFLOW TO CREDITORS = 90 - (1480-1020) = -370 MILLION
ANSWER : - 370 MILLION
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