Question

Red Barchetta Co. paid $27,950 in dividends and $28,941 in interest over the past year. During the year, net working capital increased from $13,746 to $18,469. The company purchased $43,100 in fixed assets and had a depreciation expense of $17,255. During the year, the company issued $25,250 in new equity and paid off $21,350 in long-term debt. What was the company's cash flow from assets

Answer 1

$52,991

Step-by-step explanation:

The computation of the cash flow from assets is shown below:

As we know that

Cash flow from assets = cash flow to shareholders + cash flow to creditors

where,

cash flow to shareholders

= Dividend paid - new equity issued

= $27,950 - $25,250

= $2,700

And, the cash flow to creditors is

Cash flow to creditors = Interest paid - closing balance of long term debt + beginning balance of long term debt

= $28,941 - 0 + $21,350

= $50,291

So, the cash flow form assets is

Cash flow from assets = cash flow to shareholders + cash flow to creditors

= $2,700 + $50,291

= $52,991