Schwert Corp. shows the following information on its 2014 income statement: sale

Question

Schwert Corp. shows the following information on its 2014 income statement: sales = $235,000; costs = $141,000; other expenses = $7,900; depreciation expense = $14,600; interest expense = $14,900; taxes = $19,810; dividends = $12,000. In addition, you’re told that the firm issued $6,400 in new equity during 2014 and redeemed $4,900 in outstanding long-term debt.

  
What was the 2014 operating cash flow? (Do not round intermediate calculations.)

  
   Operating cash flow$   

What was the 2014 cash flow to creditors? (Do not round intermediate calculations.)

    Cash flow to creditors$   

What was the 2014 cash flow to stockholders? (Do not round intermediate calculations.)

   Cash flow to stockholders$   

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

a.

OCF = $66,290

b.

Note that the net new long-term debt is negative because the company repaid part of its long-term debt.

c.

d.

CFA is also equal to OCF – Net capital spending – Change in NWC. We already know OCF. Net capital spending is equal to:

Net capital spending = $39,600

Addition to NWC = 1290

OCF = $66,290

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