Jetson Spacecraft Corp. shows the following information on its 2009 income state

Question

Jetson Spacecraft Corp. shows the following information on its 2009 income statement: sales = $201,000; costs = $93,000; other expenses = $5,900; depreciation expense = $9,000; interest expense = $12,800; taxes = $32,120; dividends = $9,700. In addition, you're told that the firm issued $8,000 in new equity during 2009 and redeemed $9,600 in outstanding long-term debt. (a) What is the 2009 operating cash flow? (b) What is the 2009 cash flow to creditors? (c) What is the 2009 cash flow to stockholders? (d) If net fixed assets increased by $19,000 during the year, what was the addition to NWC?

Explanation / Answer

Income statement - Sales 201000 - Costs 93000 - other expenses 5900 - depreciation 9000 EBIT 93100 - Interest 12800 EBT 80300 Tax 32120 PAT 48180 Dividend 9700 Retained earnings 38480 (a) Operating cashflows = EBIT 93100 + Depreciation 9000 - Taxes 32120 OCF 69980 b) cash flow to creditors Interest paid 12800 Debt paid 9600 CFC 22400 c) Cash flow to stakeholders = Dividend paid 9700 (-) New equity 8000 CFS 1700 d) Increase in net fixed asset - Less: Increase in retainedearnings - Less: Issue of Equity + Redemption of Debt CFA = CFC + CFS         = 22400 + 1700        = 24100 Also - CFA = OCF - Net capital spending - Working capital changes * Net capital spending = Investment in Fixed asset + depreciation     = 19000 + 9000 28000 Change in NWC = OCF - Net Capital spending - CFA            = 69980 - 28000 - 24100 17880 Please provide feedback……... thanks in advance……… :-)

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