5. The DIA had long-term debt of $78,445 and common stock of $315,568 last year-

Question

5. The DIA had long-term debt of $78,445 and common stock of $315,568 last year-end. This year-end long-term debt is $61,290 and common stock is $394,379. During the year DIA had net income of $248,462 and paid dividends of $219,651. Calculate the cash flow from financing activities for the year for the Accounting Statement of Cash Flows. (Hint: remember to account for retained earnings and dividends)

$0

$46,124

-$46,124

-$186,806

$186,806

6. The DIA had long-term debt of $78,445 last year-end. This year-end long-term debt is $61,290. During the year DIA paid interest of $25,000. Calculate the cash flow from/to debtholders for the year for the Financial Cash Flows.

$42,155

-$42,155

-$17,155

$17,155

$78,445

  

7.A firm has Sales of $9,610, Cost of Goods Sold of $6,310, Depreciation of $1,370, Interest of $630, and Taxes of $455. What is the Operating Cash Flow?

$845

$3,300

$2,845

$1,930

$1,300

Explanation / Answer

Answer to Question 5:

Decrease in Long-term Debt = Beginning Long-term Debt - Ending Long-term Debt
Decrease in Long-term Debt = $78,445 - $61,290
Decrease in Long-term Debt = $17,155

Increase in Common Stock = Ending Common Stock - Beginning Common Stock
Increase in Common Stock = $394,379 - $315,568
Increase in Common Stock = $78,811

Cash Flow from Financing Activities = Increase in Common Stock - Decrease in Long-term Debt - Dividend paid
Cash Flow from Financing Activities = $78,811 - $17,155 - $219,651
Cash Flow from Financing Activities = -$157,995

Answer to Question 6:

Net New Long-term Debt = Ending Long-term Debt - Beginning Long-term Debt
Net New Long-term Debt = $61,290 - $78,445
Net New Long-term Debt = -$17,155

Cash Flow from Creditors = Interest Expense - Net New Long-term Debt
Cash Flow from Creditors = $25,000 - (-$17,155)
Cash Flow from Creditors = $42,155

Answer to Question 7:

EBIT = Sales - Cost of Goods Sold - Depreciation
EBIT = $9,610 - $6,310 - $1,370
EBIT = $1,930

Operating Cash Flow = EBIT - Taxes + Depreciation
Operating Cash Flow = $1,930 - $455 + $1,370
Operating Cash Flow = $2,845

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