1. The 2017 balance sheet of Kerber’s Tennis Shop, Inc., showed $500,000 in the
ID: 2814096 • Letter: 1
Question
1.
The 2017 balance sheet of Kerber’s Tennis Shop, Inc., showed $500,000 in the common stock account and $3.3 million in the additional paid-in surplus account. The 2018 balance sheet showed $540,000 and $3.5 million in the same two accounts, respectively.
If the company paid out $305,000 in cash dividends during 2018, what was the cash flow to stockholders for the year? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)
2.
The 2017 balance sheet of Kerber's Tennis Shop, Inc., showed long-term debt of $6.3 million, and the 2018 balance sheet showed long-term debt of $6.5 million. The 2018 income statement showed an interest expense of $220,000. During 2018, the company had a cash flow to creditors of $20,000 and the cash flow to stockholders for the year was $75,000. Suppose you also know that the firm’s net capital spending for 2018 was $1,480,000, and that the firm reduced its net working capital investment by $91,000.
What was the firm’s 2018 operating cash flow, or OCF? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)
The 2017 balance sheet of Kerber’s Tennis Shop, Inc., showed $500,000 in the common stock account and $3.3 million in the additional paid-in surplus account. The 2018 balance sheet showed $540,000 and $3.5 million in the same two accounts, respectively.
Explanation / Answer
1.Cash flow to stockholders:
2.first let us know cash flow from assets
cash flow from assets = cash flow to creditors + cash flow to stockholders
=>20,000 + 75,000
=>95,000.
operating cash flow = cash flow from assets + change in net working capital + net capital spending
=>95,000 + (-91,000) +1,480,000
=>1,484,000.
firm's operating cashflow = $1,480,000.
cash dividends 305,000 increase in common stock (540,000-500,000) (40,000) increase in additional paid in surplus (3.5 million - 3.3 million)=>0.2 million (200,000) cash flow to shareholders 65,000Related Questions
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