4. Holly Farms paid $38,600 in dividends and $24,615 in interest over the past y

Question

4. Holly Farms paid $38,600 in dividends and $24,615 in interest over the past year while net working capital increased from $15,506 to $17,411. The company purchased $38,700 in net new fixed assets and had depreciation expenses of $14,784. During the year, the firm issued $20,000 in net new equity and paid off $23,800 in long-term debt. What is the amount of the cash flow from assets? 4. Holly Farms paid $38,600 in dividends and $24,615 in interest over the past year while net working capital increased from $15,506 to $17,411. The company purchased $38,700 in net new fixed assets and had depreciation expenses of $14,784. During the year, the firm issued $20,000 in net new equity and paid off $23,800 in long-term debt. What is the amount of the cash flow from assets?

Explanation / Answer

Cash flow from assets is the aggregate total of all cash flows related to the assets of a business. Cash flow from assets = Cash flow generated by operations + Changes in working capital + Changes in fixed assets Cash flows from operations = Net income + depreciation = $0 + $14784 = $14784 Changes in working capital = Increase in net working capital = $15506 - $17411 = -$1905 Changes in fixed assets = Purchase of net fixed assets = -$38700 Cash flow from assets = $14784 -$1905 - $38700 = -$25,821

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