Jetson Spacecraft Corp. shows the following information on its 2011 income state

Question

Jetson Spacecraft Corp. shows the following information on its 2011 income statement: sales = $380,000; costs = $300,000; other expenses = $7,900; depreciation expense = $15,000; interest expense = $13,000; taxes = $15,435; dividends = $10,000. In addition, you’re told that the firm issued $4,500 in new equity during 2011 and redeemed $3,000 in outstanding long-term debt.

What is the 2011 operating cash flow?

What is the 2011 cash flow to creditors?

What is the 2011 cash flow to stockholders?

If net fixed assets increased by $20,000 during the year, what was the addition to NWC?

Jetson Spacecraft Corp. shows the following information on its 2011 income statement: sales = $380,000; costs = $300,000; other expenses = $7,900; depreciation expense = $15,000; interest expense = $13,000; taxes = $15,435; dividends = $10,000. In addition, you’re told that the firm issued $4,500 in new equity during 2011 and redeemed $3,000 in outstanding long-term debt.

Explanation / Answer

(A) Operating Cash Flows in 2011 -

Sales $ 380000

Less : Costs $ 300000

Less : Other Expenses $ 7900

Less : Taxes $ 15435

Operating Cash Flows $ 56665

(B) Cash Flow to the creditors :

Interest paid - Net New borrowing   

= $ 13000 - $ 3000

= $ 10000 will be the cash flow to creditors

(c) Cash Flow to Stock Holders :-

Dividends paid - New Net Equity

= 10000 -4500

= $ 5500

(d) Addition to NWC

= Sales - Cost - other Expenses - Interest Expenses - Taxes - Dividend + New Equity Issued - Outstanding Long Term Debt - ( Depreciation Expenses + Fixed Assets Increased )

= 380000 - 300000 - 7900 - 13000 - 15435 - 10000 + 4500 - 3000 - ( 15000 + 20000 )

= $ 165

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