Year (year) 2013 2014 Sales (Sales) $ 740 $ 782 Cost of Goods and Services) 430
ID: 2515332 • Letter: Y
Question
Year (year) 2013 2014
Sales (Sales) $ 740 $ 782
Cost of Goods and
Services)
430 455
Interest Payment (Interest) 33 30
Dividends 16 17
Depreciation 250 215
Cash (Cash) 70 76
Accounts Receivable 563 502
Current Liabilities 390 405
Inventory 662 640
Long-Term Debt 340 410
Net Fixed Assets 1,680 1,425
Common Stock 700 235
Tax Rate 35% 30%
(1) How much net working capital has increased or decreased between 2013 and 2014?
(2) What is the net capital spending in 2014?
(3) What is the operating cash flow in 2014?
(4) What is the total cash flow of the enterprise in 2014?
Explanation / Answer
a) 2013 2014 Current Assets Cash $70.00 $76.00 Accounts Receivable $563.00 $502.00 Inventory $662.00 $640.00 Total Current Assets $1,295.00 $1,218.00 Less: Current Liabilities $390.00 $405.00 Working Capital $905.00 $813.00 Decreased Working Capital $92.00 b) Net Capital spending = Net fixed assets 2014 – Net fixed assets 2013 + Depreciation Net capital spending Net Capital spending = 1425 – (1680 + 250) $505.00 c) 2013 2014 Sales $740.00 $782.00 Less: Cost of Goods and Services $430.00 $455.00 Gross profit $310.00 $327.00 Less: Depreciation $250.00 $215.00 EBIT $60.00 $112.00 Interest Payment $33.00 $30.00 EBT $27.00 $82.00 Less Tax x 35% 30.00% $9.45 $24.60 Net Income $17.55 $57.40 OCF = EBIT + Depreciation – Taxes OCF = $302.40 d) Total cash flow OCF – Change in NWC – Net capital spending Total cash flow = $302.40-(-92)-505 -$110.60
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