Zigs Industries had the following operating results for 2011: sales = $30,300; c
ID: 2630062 • Letter: Z
Question
Zigs Industries had the following operating results for 2011: sales = $30,300; cost of goods sold = $20,210; depreciation expense = $5,620; interest expense = $3,090; dividends paid = $1,900. At the beginning of the year, net fixed assets were $17,330, current assets were $5,950, and current liabilities were $3,550. At the end of the year, net fixed assets were $21,110, current assets were $7,030, and current liabilities were $4,090. The tax rate for 2011 was 30 percent.
If no new debt was issued during the year, what is the cash flow to creditors?
If no new debt was issued during the year, what is the cash flow to stockholders? (Negative amount should be indicated by a minus sign.)
Zigs Industries had the following operating results for 2011: sales = $30,300; cost of goods sold = $20,210; depreciation expense = $5,620; interest expense = $3,090; dividends paid = $1,900. At the beginning of the year, net fixed assets were $17,330, current assets were $5,950, and current liabilities were $3,550. At the end of the year, net fixed assets were $21,110, current assets were $7,030, and current liabilities were $4,090. The tax rate for 2011 was 30 percent.
Explanation / Answer
a.
Computation of net income for 2011:
Sales $30,300
Cost of goods sold (20,210)
Depreciation expense (5,620)
EBIT 4,470
Interest expense (3,090)
Taxable income 1,380
Taxes 414
Net income $966
b.
Computation of operating cash flow:
Operating cash flow = EBIT + Depreciation
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