During the year, Belyk Paving Co. had sales of $2,382,000. Cost of goods sold, a

Question

During the year, Belyk Paving Co. had sales of $2,382,000. Cost of goods sold, administrative and selling expenses, and depreciation expense were $1,443,000, $436,800, and $491,800, respectively. In addition, the company had an interest expense of $216,800 and a tax rate of 30 percent (ignore any tax loss carryback or carryforward provisions.). Belyk Paving Co. paid out $369,000 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. (Enter your answer as directed, but do not round intermediate calculations.) Required: Calculate the firm's new long-term debt added during the year. Long-term debt $

Explanation / Answer

2382000

1443000

The operating cash flow for the year was => EBIT + DEP => $10400 + 491800 => $502200

Cash flow from assets => OCF – Change in NWC – Net capital spending Cash flow from assets

=> 502200 -0 -0

Cash flow from assets => $502200

We can also find the cash flow to stockholders, which is

Cash flow to stockholders => Dividends – Net new equity Cash flow to stockholders

=> 369000 -0

Cash flow to stockholders => $369000

Now, We will calculate

Cash flow from assets = Cash flow to creditors + Cash flow to stockholders

Cash flow to creditors =>502200 - 369000

=>$133200

Now we can use the cash flow to creditors equation to find:

Cash flow to creditors => Interest – Net new long-term debt

Net new long-term debt => Interest - Cash flow to creditors

=> 216800 - 133200

Net new long-term debt => $83600

Sales

2382000

COGS

1443000

Contribution 939000 administrative and selling expenses 436800 depreciation expense 491800 EBIT 10400 inerest 216800 EBT (206400) TAXES ---- EAT (206400)

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.