Calculating Cash Flows. Weiland Co. shows the following information on its 2014

Question

Calculating Cash Flows. Weiland Co. shows the following information on its 2014 income statement: sales = $167,000; costs = $88,600; other expenses = $4,900; depreciation expense = $11,600; interest expense = $8,700; taxes = $18,620; dividends = $9,700. In addition, you’re told that the firm issued $2,900 in new equity during 2014, and redeemed $4,000 in outstanding long-term debt. a. Calculating Cash Flows. What is the 2014 operating cash flow? b. What is the 2014 cash flow to creditors? c. What is the 2014 cash flow to stockholders? d. If net fixed assets increased by $23,140 during the year, what was the addition to NWC? Calculating Cash Flows. Weiland Co. shows the following information on its 2014 income statement: sales = $167,000; costs = $88,600; other expenses = $4,900; depreciation expense = $11,600; interest expense = $8,700; taxes = $18,620; dividends = $9,700. In addition, you’re told that the firm issued $2,900 in new equity during 2014, and redeemed $4,000 in outstanding long-term debt. a. Calculating Cash Flows. What is the 2014 operating cash flow? b. What is the 2014 cash flow to creditors? c. What is the 2014 cash flow to stockholders? d. If net fixed assets increased by $23,140 during the year, what was the addition to NWC?

Explanation / Answer

a The 2014 operating cash flow = EBIT+Depriciation - Taxes

EBIT = 167000-88600-4900-11600

= 61900

OPERATING CASH FLOW = EBIT + Depriciation - Taxes

= 61900 +11600-18620

= $54880

  

b 2014 cash flow to creditors = beginning total liabilities - ending total liabilities + intrest paid

= 88600+4900

= $ 93500

c 2014 cash flow to stockholders = Dividend paid - (ending common stock - opening common stock)

= 9700 - (2900-0 )

= 9700-2900

= $ 6800

d If net fixed asset increased by $ 23140, then NWC decreased by $ 23140

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