Final answer:
The cash flow from assets for company XYZ in 2021 is calculated to be $380,000, cash flow to creditors is $40,000, and cash flow to stockholders is the dividends paid which is $80,000.
Step-by-step explanation:
To answer the question about company XYZ's cash flow from assets, cash flow to creditors, and cash flow to stockholders for the year 2021, we need to use the information provided to perform a series of financial calculations.
Cash Flow From Assets
Cash flow from assets, also known as free cash flow to the firm (FCFF), can be calculated using the following formula:
Net Income
Plus: Depreciation Expense (a non-cash charge)
Less: Increase in Accounts Receivable (money that has not been collected)
Plus: Increase in Accounts Payable (money that has not been paid out)
Less: Capital Expenditures (money spent on maintaining or acquiring capital assets)
Using the numbers provided:
$500,000 (Net Income) + $100,000 (Depreciation Expense) - $50,000 (Increase in Accounts Receivable) + $30,000 (Increase in Accounts Payable) - $200,000 (Capital Expenditures) = $380,000
Cash Flow to Creditors
Cash flow to creditors is calculated as:
Interest Expense
Less: Net New Borrowing (not provided in the question, so we'll assume it's 0)
Therefore, since there is no new borrowing mentioned:
$40,000 (Interest Expense) - $0 (Net New Borrowing) = $40,000
Cash Flow to Stockholders
Cash flow to stockholders is the dividends paid:
$80,000 (Dividends Paid)
In summary, for 2021, company XYZ's cash flow from assets is $380,000, cash flow to creditors is $40,000, and cash flow to stockholders is $80,000.
Question: For the company XYZ in the year 2021, the financial statements reveal the following information:
Net income: $500,000
Depreciation expense: $100,000
Increase in accounts receivable: $50,000
Increase in accounts payable: $30,000
Capital expenditures: $200,000
Dividends paid: $80,000
Interest expense: $40,000
For the year 2021, calculate the cash flow from assets, cash flow to creditors, and cash flow to stockholders?