Graffiti Advertising, Inc., reported the following financial statements for the

Question

Graffiti Advertising, Inc., reported the following financial statements for the last two years.
  

a. Calculate the operating cash flow. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
  
Operating cash flow            $
  
b. Calculate the change in net working capital. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
  
Change in net working capital            $
  
c. Calculate the net capital spending. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
  
Net capital spending            $
  
d. Calculate the cash flow from assets. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
  
Cash flow from assets            $

e. Calculate the cash flow to creditors. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
  
Cash flow to creditors            $

f. Calculate the cash flow to stockholders. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
  
Cash flow to stockholders            $

2016 Income Statement Sales $ 573,200 Costs of goods sold 273,945 Selling and administrative 124,717 Depreciation 54,560 EBIT $ 119,978 Interest 19,648 EBT $ 100,330 Taxes 40,132 Net income $ 60,198 Dividends $ 11,200 Addition to retained earnings $ 48,998

Explanation / Answer

1. Operating Cash Flows

Change in inventory = 22,770 - 13,810 = 8,960

Change in Accounts receivable = 21,083- 18,978 =8960

Change in accounts payable = 16,482 - 14,492 = 1040

Change in note payable = 1,990

Depreciation = 54,560

Net income = 60,198

Operating Cash Flows = Net income + Depreciation Expense + Changes in Working Capital

Operating Cash Flows = 60,198 + 54,560-1040-8,960+1040+1,990 = 107788

2. Change in net working capital

Net Working capital in 2015 = current assets – current liabilities = 46,268- 23,980 = 22,288

Net Working capital in 2016 = current assets – current liabilities = 58,319- 27,010 = 31,309

Change in net working capital = 31,309 - 22,288 = 9,021

3. Net capital spending

Net capital spending = Fixed assets at the end of 2016 – fixed assets at the beginning of the 2015 + depreciation

Net capital spending = 406,295 -344,906+54,560 = 115949

4. cash flow from assets = operating cash flow – change in fix assets = 107788 – (406,295 -344,906) = 46,399

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