Use the following information for XYZ bUSINESS (assume the tax rate is 30 percen

Question

Use the following information for XYZ bUSINESS (assume the tax rate is 30 percent):

2014 2015

Sales $ 14,573 $ 14,736

Depreciation 1,721 1,796

Cost of goods sold 4,279 4,767

Other expenses 976 854

interest 825 956

Cash 6,157 6,646

Accounts rec 8,100 9,607

Short-term notes payable

1,230 1,207

Long-term debt 20,500 24,786

Net fixed assets 51,020 55,750

Accounts payable 4,480 4,824

Inventory 14,385 15,348 D

ividends 1,250 1,678

For 2015, calculate the cash flow from assets, cash flow to creditors, and cash flow to stockholders. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

I did get Cash Flow to Creditors right -3,330

I need help with CFFA and CFTS

Thansk

Explanation / Answer

Answer-

Calculation of Earning before interest and Tax and Capital surplus (in$)

Operating Cash flow for 2015 = EBIT + Depreciation - Taxes

= $7,319 + $1,796 - $1,908.90

= $7,206.10

Capital Spending for 2015 = Net fixed assets in 2015 - Net fixed assets in 2014 + Depreciation

= $55,750 - $51,020 + $1,796 = $6,526

Addition to Net Working Capital (NWC) = NWC in2015 - NWC in 2014

NWC = (Accounts receivable + Inventories) - (Accounts payable + Short term notes payable)

In 2015 = ($9,607 + $15,348) - ($4,824 + $1,207) = $18,924

In 2014 = ($8,100 + $14,,385) - ($4,480 + $1230) = $16,775

Addition to NWC = $18,924 - $16,775 = $2,149

Cash flow from Assets (CFFA) = Operating cash flow - Addition to NWC - Capital spending

= $7,206.10 - $2,149 - $6,526

= $1,468.90

Cash flow to stockholders = Dividend Paid - Net new equity issued

Net new equity issued = (Common stock + retained earnings in 2015) - (Common stock + retained earnings in 2014)

= $2,776.10 - $3,490.40 (as there is no common stock only retained earning is considered)

= $-714.30

Cash flow to stockholders (CFTS) = $1,678 - ($-714.30) = $2,392.30

Answer-

Calculation of Earning before interest and Tax and Capital surplus (in$)

2014 2015 Sales 14573.00 14736.00 Less: Cost of Goods sold 4279.00 4767.00 10294.00 9969.00 Less: Other exoenses 976.00 854.00 Depreciation 1721.00 1796.00 EBIT 7597.00 7319.00 Less: Interest 825.00 956.00 Earning before tax 6772.00 6363.00 Less: Tax @30% 2031.60 1908.90 4740.40 4454.10 Less: Dividend 1250.00 1678.00 Capital Surplus(Retained earnings) 3490.40 2776.10

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