Jetson Spacecraft Corp. shows the following information on its 2009 income state

Question

Jetson Spacecraft Corp. shows the following information on its 2009 income statement: sales = $197,000; costs = $91,000; other expenses = $5,600; depreciation expense = $9,100; interest expense = $12,900; taxes = $27,440; dividends = $9,900. In addition, you're told that the firm issued $7,800 in new equity during 2009 and redeemed $9,400 in outstanding long-term debt.

(a) What is the 2009 operating cash flow?
(b) What is the 2009 cash flow to creditors?
(c) What is the 2009 cash flow to stockholders?
(d) If net fixed assets increased by $24,000 during the year, what was the addition to NWC?

Please show work please!

Explanation / Answer

a, OCF= EBIT+Depreciation-Taxes=91,300+9,100-27,440=$72,960 b, Cash flow to creditors = Interest paid – new net borrowing 12,900-9,400=$3,500 c,Cash flow to stockholders = Dividends paid – net equity raised 9,900-7,800=$2,100 d, If net fixed assets increased by $24,000 during the year, the addition to NWC is $ Cash flow from assets = Cash flows to creditors + cash flows to stockholders Cash flows from assets = Operating cash flows- Capital spending – Increase in NWC $3,500+$2,100=$72,960-$24,000-Increase in NWC -> Increase in NWC=48,960-5,600=$43,360

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