In: Finance
Cash flow from assets = Cash flow to creditors + Cash flow to stockholders. | |||||||||
From the above relation we can calculate cash flow to stockholders, which would be used to calculate shares repurchased or sold. | |||||||||
Cash flow to creditors | Interest paid - Net new borrowing | ||||||||
Cash flow to creditors | 3-30 | ||||||||
Cash flow to creditors | -$27.00 | ||||||||
Calculation of cash flow to stockholders. | |||||||||
Cash flow from assets = Cash flow to creditors + Cash flow to stockholders. | |||||||||
25 | -27+ Cash flow to stockholders | ||||||||
Cash flow to stockholder's | $52.00 | ||||||||
Calculation of shares repurchased or sold | |||||||||
Cash flow to stockholder's | Dividend paid - Net new equity | ||||||||
52 | 10 - Net new equity | ||||||||
Net new equity | 10-52 | ||||||||
Net new equity | -42 | ||||||||
Net new equity is negative, this mean company has repurchased stock. | |||||||||
This firm repurchased stock in the amount of -$42. | |||||||||