Volbeat Corp. shows the following information on its 2015 income statement: sale

Question

Volbeat Corp. shows the following information on its 2015 income statement: sales = $251,000; costs = $156,000; other expenses = $7,900; depreciation expense = $18,400; interest expense = $14,400; taxes = $19,005; dividends = $11,500. In addition, you’re told that the firm issued $5,900 in new equity during 2015 and redeemed $4,400 in outstanding long-term debt.

a. What is the 2015 operating cash flow? (Do not round intermediate calculations.) Operating cash flow $

b. What is the 2015 cash flow to creditors? (Do not round intermediate calculations.) Cash flow to creditors $

c. What is the 2015 cash flow to stockholders? (Do not round intermediate calculations.) Cash flow to stockholders $

d. If net fixed assets increased by $25,000 during the year, what was the addition to NWC? (Do not round intermediate calculations.) Addition to NWC $

Explanation / Answer

sales 2,51,000 costs 156000 Gross Margin 95,000 depreciation expense 18,400 other expenses 7900 EBIT 68,700 Interest expense 14400 Taxable Income 54,300 taxes 19005 Net Income 35,295 cash flow to operating cash flow EBIT 68,700 ADD Depreciation 18,400 Less Tax 19,005 operating cash flow 68,095 cash flow to creditors Cash flow to creditors = Interest paid – Net new borrowing =14400-(-4400) =18800 18800 cash flow to stockholders Cash flow to stockholders = Dividends paid – Net new equity Cash flow to stockholders =11500-5900 5600 Cash flow from assets = OCF – Change in NWC – Net capital spending Cash flow from assets = Cash flow to creditors + Cash flow to stockholders Cash flow from assets =18800+5600 =24400 24400 Net capital spending = Depreciation + Increase in fixed assets Net capital spending = 18400+25000 =43400 43400 Cash flow from assets = OCF – Change in NWC – Net capital spending 24400=68095-Change in NWC-43400 Addition to NWC=295

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