Question

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At the end of the year ABC Company reported long-term debt of $3,974 million and the...

At the end of the year ABC Company reported long-term debt of $3,974 million and the current portion of long-term debt of $219 million. At the end of the prior year they reported long-term debt of $3,503 million and the current portion of long-term debt of $268 million. How much (in $ millions) did the company receive from issuing new long-term debt or pay off any existing debt? If they issued debt, enter your answer as a positive number; if they repaid debt, be certain to place a negative sign in front of your answer. (please show all steps)

Expert Solution

Solution :

As per the information given in the question we have

Long term debt at the beginning of the year = $ 3,503 million ;

Current Portion of the Long term debt at the beginning of the year = $ 268 million

Thus the Non Current Portion of the Long term debt at the beginning of the year = $ 3,503 million - $ 268 million

= $ 3,235 million

Long term debt at the end of the year = $ 3,974 million

Current Portion of the Long term debt at the end of the year = $ 219 million

Thus the Non Current Portion of the Long term debt at the end of the year = $ 3,974 million - $ 219 million

= $ 3,755 million

Calculation of changes in current portion of long term debt :

= Current Portion of the Long term debt at the end of the year - Current Portion of the Long term debt at the beginning of the year

= $ 219 million - $ 268 million

= - $ 49 Milion

Thus the current portion of the Long Term Debt that was repaid during the year = $ 49 Million

Calculation of changes in Non current portion of long term debt :

= Non Current Portion of the Long term debt at the end of the year – Non Current Portion of the Long term debt at the beginning of the year

= $ 3,755 million - $ 3,235 million

= $ 520 Milion

Thus the Non current portion of the Long Term Debt that was issued during the year = $ 520 Million

Thus we have

Net change in the Long Term debt during the year = Repayment of current portion of long term debt + Issue of Non – Current portion of long term debt

= - $ 49 million + 590 million

= $ 471 million

Thus the Long term debt issued during the Year = $ 471 million

Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution in a tabular format.

jeff jeffy answered 1 month ago

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