Question

Adison Winery had beginning long-term debt of $37,761 and ending long-term debt of $43,118. The beginning and ending total debt balances were $46,693 and $51,620, respectively. The company paid interest of $4,201 during the year. What was the company's cash flow to creditors

Answer 1

See below

Step-by-step explanation:

The company's cash flow to creditors is the total amount of money available to be paid to creditor. It is a cash flow because the money goes out of the company in order to be paid to creditors

Therefore, the company's cash flow to creditors is computed as;

= Interest paid - (Ending long term debt - Beginning long term debt)

= $4,201 - ($43,118 - $37,761)

= $4,201 - $5,357

= -$1,156

Hence, operating cash flow to creditors is -$1,156