During the year, Belyk Paving Co. had sales of $2,387,000. Cost of goods sold, a

Question

During the year, Belyk Paving Co. had sales of $2,387,000. Cost of goods sold, administrative and selling expenses, and depreciation expense were $1,438,000, $436,300, and $491,300, respectively. In addition, the company had an interest expense of $216,300 and a tax rate of 40 percent (ignore any tax loss carryback or carryforward provisions.). Belyk Paving Co. paid out $384,000 in cash dividends. Assume that no new investments were made in net fixed assets or net working capital, and no new stock was issued during the year. Required: Calculate the firm's new long-term debt added during the year.

Explanation / Answer

Operating Cash Flow = EBIT + Depreciation - Taxes Ebit = Earnings before interest and taxes. Now for your assignment.. $2,379,000 -- Sales $1,428,000 -- Cost of goods sold(COGS) $435,300-A&S expenses $490,400 -- Depreciation $215,300 -- Interest expense Taxes=25% So, by the formula: Sales - COGS - A&S expenses = EBIT + Depreciation = $515,700 Taxes = 25% * $515,700 = $128,925 Operating cash flow = $386,775

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