1.Calculate the operating cash flow 2.Calculate the change in net working capita
ID: 2617407 • Letter: 1
Question
1.Calculate the operating cash flow
2.Calculate the change in net working capital.
3.Calculate the net capital spending.
4.Calculate the cash flow from assets.
5.Calculate the cash flow to creditors.
6.Calculate the cash flow to stockholders.
Gordon's Farm Machines, Inc., reported the following financial statements for the last two years. (Enter your answer as directed, but do not round intermediate calculations.) 2017 Income Statement Sales Costs of goods sold Selling & administrative Depreciation 5 750,000 385,000 150,000 58,000 EBIT Interest 5 159.000 19,000 EBT Taxes 5 140,000 47,600 Net income 5 92.400 Dividends Addition to retained earnings 5 36.000 5 56,400 GORDON'S FARM MACHINES, INC Balance Sheet as of December 31, 2016 Cash Accounts receivable Inventory 5 18,000 Accounts payable 22,000 Notes payable 5 9,000 18,000 12,000 Current liabilities Current assets Net fixed assets 5 52,000 Long-term debt 5 450,000 Owner's equity 5 27,000 5 150,000 S 325.000 Total assets 5 502,000 Total liabilities and owners' equity 502,000 GORDON'S FARM MACHINES, INC. Balance Sheet as of December 31, 2017 5 20,000 Accounts payable 28,000 Notes payable Cash Accounts receivable Inventory 5 12,000 21,000 22,000 S 33,000 5 160,000 5 427,000 Current liabilities Current assets Net fixed assets 5 70,000 Long-term debt 5 550,000 Owner's equity Total assets 5 620,000 Total liabilities and owners' equity 620,000Explanation / Answer
Answer 1.
Operating Cash Flow = EBIT + Depreciation - Taxes
Operating Cash Flow = $159,000 + $56,000 - $47,600
Operating Cash Flow = $167,400
Answer 2.
Beginning Working Capital = Beginning Current Assets - Beginning Current Liabilities
Beginning Working Capital = $52,000 - $27,000
Beginning Working Capital = $25,000
Ending Working Capital = Ending Current Assets - Ending Current Liabilities
Ending Working Capital = $70,000 - $33,000
Ending Working Capital = $37,000
Change in Net Working Capital = Ending Working Capital - Beginning Working Capital
Change in Net Working Capital = $37,000 - $25,000
Change in Net Working Capital = $12,000
Answer 3.
Net Capital Spending = Depreciation + Ending Net Fixed Assets - Beginning Net Fixed Assets
Net Capital Spending = $56,000 + $550,000 - $450,000
Net Capital Spending = $156,000
Answer 4.
Cash Flow from Assets = Operating Cash Flow - Change in Net Working Capital - Net Capital Spending
Cash Flow from Assets = $167,400 - $12,000 - $156,000
Cash Flow from Assets = -$600
Answer 5.
Net New Borrowing = Ending Long-term Debt - Beginning Long-term Debt
Net New Borrowing = $160,000 - $150,000
Net New Borrowing = $10,000
Cash Flow to Creditors = Interest Expense - Net New Borrowing
Cash Flow to Creditors = $19,000 - $10,000
Cash Flow to Creditors = $9,000
Answer 6.
Cash Flow to Stockholders = Cash Flow from Assets - Cash Flow from Creditors
Cash Flow to Stockholders = -$600 - $9,000
Cash Flow to Stockholders = -$9,600
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.