Question

Cusic Industries had the following operating results for 2015: sales = $28,560; cost of goods sold = $19,460; depreciation expense = $5,020; interest expense = $2,340; dividends paid = $1,150. At the beginning of the year, net fixed assets were $16,980, current assets were $5,800, and current liabilities were $3,280. At the end of the year, net fixed assets were $20,360, current assets were $7,360, and current liabilities were $3,900. The tax rate for 2015 was 30 percent.

  

a.	What was net income for 2015? (Do not round intermediate calculations.)

     

Net income

$

    

b.	What was the operating cash flow for 2015? (Do not round intermediate calculations.)

     

Operating cash flow

$

c.	What was the cash flow from assets for 2015? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.)

     

Cash flow from assets

$

     

d-1	If no new debt was issued during the year, what was the cash flow to creditors? (Do not round intermediate calculations.)

  

Cash flow to creditors

$

  

d-2	If no new debt was issued during the year, what was the cash flow to stockholders? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.)

       

Cash flow to stockholders

$

Answer 1

What was net income for 2015? (Do not round intermediate calculations.)

Net income before taxes

= sales - cost of goods sold - depreciation expense - interest expense

= $1,740

Tax = 30% of 1740 = 522

Net Income = $1,218

Operating Cash Flow = Net Income + Depreciation + Interest Expenses

= 1,218 + 5,020 + 2,340

= 8,578

Net Working Capital (Beginning)

= Current Asset - Current Liabilities

= 5,800 - 3,280

= 2,520

Net Working Capital (End)

= Current Asset - Current Liabilities

= 7,360 - 3,900

= 3,460

Change in Net working Capital

= Net Working Capital (End) - Net Working Capital (Beginning)

= 3,460 - 2,520

= 940

Net Capital Spending

= Net Fixed Assets (End) - Net Fixed Assets (beg) + Depreciation

= 20,360 - 16,980 + 5,020

= 8,400

Cash flow from assets

=  Operating Cash Flow − Change in Net Working Capital − Net capital spending

= 8,578 - 940 - 8,400

= -762

Cash Flow to creditors = Interest - Net New LTD

= 2,340

Cash Flow to Stockholders = Cash flow from assets − Cash flow to creditors

= -762 - 2,340

= -3,102