Calculate Operating Cash Flow, Net Capital Spending, Change in Net Working Capit

Question

Calculate Operating Cash Flow, Net Capital Spending, Change in Net Working Capital, Cash Flow to Creditors, and Cash Flow to Shareholders.

Please show all steps. Thank you.

2015 2016 Sales $3,500 Cost of Goods Sold $1,800 Depreciation Expense $875 Interest Expense $425 Current Assets $2,000 $2,500 Total Fixed Assets $6,200 $7,300 Accumulated Depreciation $1,300 This can be determined from the information given Current Liabilities $1,300 $1,500 Long-term Debt $3,500 $3,700 Common Stock $1,200 This can be determined from the information given

Explanation / Answer

Answer:

Operating Cashflow = Sales - Operarting expenses = 3500 - 1800 = 1700

Net Capital Spending = Ending fixed assets - Beginning fixed assets + Depreciation = 7300 - 6200 + 875 = 1975

Change in Net Working Capital = 2016 ( Current Assets - Current Liabilities) - 2015 (Current Assets - Current Liabilities ) = (2500 - 1500 ) - ( 2000 - 1300 ) = 300

Cash Flow to Creditors = Interest - (Ending Long Term Debt - Beginning Long Term Debt)

                                    = 425 - ( 3700 -3500 ) = 225

Cash Flow to Shareholders = Dividend paid - Net Equity

2016 Equity = Total Assets - Total Debt = (2500 + 7300 - 1300 - 875 ) - 1500 - 3700 = 2425

Cash Flow to Shareholders = 0 - (2425 - 1200 ) = -1225

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