Question

Miser Materials paid $27,500 in dividends and $28,311 in interest over the past year while net working capital increased from $13,506 to $18,219. The company purchased $42,000 in net new fixed assets and had depreciation expenses of $16,805. During the year, the firm issued $25,000 in net new equity and paid off $21,000 in long-term debt. What is the amount of the cash flow from assets?

Answer 1

Cash flow from assets = $51,800

Step-by-step explanation:

Cash flow from assets = Cash flow to Creditors + Cash flow to Shareholders

Cash flow to creditors = Interest Paid – (New loans taken – Paid Loans)

= $28,311 - ($0 - $21,000)

= $28,311 + $21,000

= $49,311

Cash flow to shareholders = Dividends paid – Net new equity

= $27,500 – $25,000

= $2,500

Cash flow from assets = $49,311 + $2,500 = $51,811