Weiland Co. shows the following information on its 2016 income statement: sales

Question

Weiland Co. shows the following information on its 2016 income statement: sales = $162,000; costs = $80,100; other expenses = $3,400; depreciation expense = $9,100; interest expense = $6,600; taxes = $21,980; dividends = $8,100. In addition, you're told that the firm issued $4,400 in new equity during 2016 and redeemed $7,500 in outstanding long-term debt.

a. What is the 2016 operating cash flow? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

b. What is the 2016 cash flow to creditors? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

c. What is the 2016 cash flow to stockholders? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

d. If net fixed assets increased by $21,150 during the year, what was the addition to NWC? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

Explanation / Answer

a: Sales=162000

Less: Costs = 80100

Gross Profits = 81900

Less: Expenses = 3400

Taxes= 21980

OCF= 56520

b. Cash flow to creditors = Interest+Repayment of loan

= 6600+7500 = 14100

C: Cash flow to stockholders = Dividend- New equity

= 8100-4400= 3700

D: Cash flow from assets= CF to creditors + Stockholders

= 14100+3700 = 17800

Net capital spending = Depreciation+ Increase in fixed assets

= 9100+21150= 30250

Cash flow from assets= OCF-Change in NWC- Net capital spending

17800= 56520- Change in NWC- 30250

Change in NWC= 56520-30250-17800= 8470

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