During the year, Belyk Paving Co. had sales of $2,390,000. Cost of goods sold, a

Question

During the year, Belyk Paving Co. had sales of $2,390,000. Cost of goods sold, administrative and selling expenses, and depreciation expense were $1,435,000, $436,000, and $491,000, respectively. In addition, the company had an interest expense of $216,000 and a tax rate of 30 percent (ignore any tax loss carryback or carryforward provisions.). Belyk Paving Co. paid out $393,000 in cash dividends. Assume that net capital spending was zero, no new investments were made in net working capital, and no new stock was issued during the year. Calculate the firm's new long-term debt added during the year.

Explanation / Answer

Income Statement Sales $2,390,000 Cost of goods sold 1,435,000 Other expenses 436,000 Depreciation 491,000 EBIT $28,000 Interest 216,000 Taxable income ($188,000) Taxes (35%) 0 Net income ($188,000) b. The operating cash flow for the year was: OCF = EBIT + Depreciation

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