Question

Use the following information for Taco Swell, Inc., (assume the tax rate is 21 percent):

  

	2017			2018
Sales	$	25,049		$	19,278
Depreciation		2,546			2,654
Cost of goods sold		6,540			6,901
Other expenses		1,462			1,263
Interest		1,195			1,410
Cash		8,761			9,757
Accounts receivable		11,658			13,992
Short-term notes payable		1,844			1,811
Long-term debt		29,570			35,654
Net fixed assets		73,160			78,120
Accounts payable		6,371			7,150
Inventory		20,713			22,032
Dividends		2,829			2,484

For 2018, calculate the cash flow from assets, cash flow to creditors, and cash flow to stockholders. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Answer 1

Answer:

EBT = Sales – Cost of Goods Sold – Depreciation – Other Expenses – Interest
EBT = $19,278 - $6,901 - $2,654 - $1,263 - $1,410
EBT = $7,050

Net Income = EBT – EBT * tax rate
Net Income = $7,050 - $7,050 *21%
Net Income = $7,050 - $1,480.5
Net Income = $5,569.5

Operating Cash Flow = Net Income + Depreciation
Operating Cash Flow = $5,569.5 + $2,654
Operating Cash Flow = $8,223.5

Beginning Working Capital = Current Assets – Current Liabilities
Beginning Working Capital = ($8,761 + $11,658 + $20,713) – ($1,844 + $6,371)
Beginning Working Capital = $41,132 - $8,215
Beginning Working Capital = $32,917

Ending Working Capital = Current Assets – Current Liabilities
Ending Working Capital = ($9,757 + $13,992 + $22,032) – ($1,811 + $7,150)
Ending Working Capital = $45,781 + $8,961
Ending Working Capital = $54,742

Net Change in Working Capital = Ending Working Capital – Beginning Working Capital
Net Change in Working Capital = $54,742 - $32,917
Net Change in Working Capital = $21,825

Change in Fixed Assets = Ending Fixed Assets – Beginning Fixed Assets
Change in Fixed Assets = $78,120 - $73,160
Change in Fixed Assets = $4,960

Cash Flow from Assets = Operating Cash Flow – Change in Net Working Capital - Change in Fixed Assets
Cash Flow from Assets = $8,223.5 - $21,825 - $4,960
Cash Flow from Assets = -$18,561.5

Cash flow to Creditors = Interest – Ending long term debt + Beginning Long term Debt
Cash Flow to Creditors = $1,410 - $35,654 + $29,570
Cash Flow to Creditors = -$4,674

Cash flow to Stockholders = Dividend paid
Cash flow to Stockholders = $2,484