Question

You are researching Time Manufacturing and have found the following accounting statement of cash flows for the most recent year. You also know that the company paid $98 million in current taxes and had an interest expense of $48 million. Calculate the cash flows from assets and the cash flows to creditors and shareholders using the accounting information in the statement of cash flows.

Answer 1

a. Cash Flows from Assets is $29m

b. Cash flow from creditors is 91.90m

Step-by-step explanation:

a. Cash Flow to creditors = Interest Paid - Net new borrowings + retirement of debt

CFC = $48m - (-139.90) + 0

CFC = $91.90 m

b. Cash flow from Assets = Operating Cash Flow - Net capital spending - Change in net working capital

Cash flow from Assets = $520 - $375 - $116

Cash Flow from Assets = $29m