Question

Weiland Co. shows the following information on its 2019 income statement: sales = $162,500; costs = $80,000; other expenses = $3,300; depreciation expense = $9,000; interest expense = $6,500; taxes = $22,295; dividends = $8,150. In addition, you're told that the firm issued $4,500 in new equity during 2019 and redeemed $7,700 in outstanding long-term debt. a. What is the 2019 operating cash flow? b. What is the 2019 cash flow to creditors? c. What is the 2019 cash flow to stockholders? d. If net fixed assets increased by $21,200 during the year, what was the addition to NWC?

Answer 1

a. 2019 Operating cash flow

Welland Co. Operating Cash Flow for 2019

Particular Amount $

Sales 162500

Cost of goods sold 80000

Other Expenses 3300

Depreciation 9000 92,300

EBIT 70200

Less: Taxes 22295

Add :Depreciation 9000

Operating Cash Flow $56905

b. Cash flow to creditors

Interest paid 6500

Add: Loan raised 7700

Cash flow to creditors 14200

c. Cash flow to Stockholders

Dividends Paid 8150

Less: Net Equity Raised 4500

Cash flow to Stockholders $3650

d. Change in Net working Capital = Change in Current Assets - Change in Liabilities

Figures for Current Asset was not given, rather the Net Fixed asset is given $21,100 which is not a current asset.