Zags Industries had the following operating results for 2015: sales = $25518; co

Question

Zags Industries had the following operating results for 2015: sales = $25518; cost of goods sold = $18958; depreciation expense = $4656; interest expense = $2126; dividends paid = $1875. At the beginning of the year, net fixed assets were $18661, current assets were $5907, and current liabilities were $3215. At the end of the year, net fixed assets were $20442, current assets were $7447, and current liabilities were $3204. The tax rate for 2015 was 35 percent. If no new debt was issued during the year,

What is cash flow to creditors?

Explanation / Answer

Solution:

Cash flow to creditors= Interest expense- ending long term debt+ beginning long term debt

cash flow to creditors=$2126-0

cash flow to creditors=$2126

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