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se the following information to answer this question. Windswept, Inc. Current In

ID: 2615552 • Letter: S

Question

se the following information to answer this question.

   

Windswept, Inc. Current Income Statement ($ in millions)
Net sales $ 10,000
Less: Cost of goods sold 7,700
Less: Depreciation

345

Earnings before interest and taxes $ 1,955
Less: Interest paid

90

Taxable Income $ 1,865
Less: Taxes

560

Net income

$ 1,305

Dividends $ 1,055


  

Windswept, Inc. Balance Sheets ($ in millions)

Last Year

This Year

Last Year

This Year

Cash $ 320 $ 335 Accounts payable $ 1,760 $ 1,595
Accounts rec. 1,010 910 Long-term debt 1,020 1,480
Inventory

1,780

1,720

Common stock $ 3,260 $ 3,090
Total $ 3,110 $ 2,965 Retained earnings

600

850

Net fixed assets

3,530

4,050


Total assets

$ 6,640

$ 7,015

Total liab. & equity

$ 6,640

$ 7,015

  

What is the cash flow to creditors?

$550 million
$550 million
$2,300 million
$-370 million
$1,225 million
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Explanation / Answer

CASHFLOW TO CREDITORS = INTEREST PAID - NET NEW BORROWINGS ( ALSO CALLED CHANGE IN LONG TERM DEBT)

CASHFLOW TO CREDITORS = 90 - (1480-1020) = -370 MILLION

ANSWER : - 370 MILLION