Lizard Lick Towing has sales of $601,506, COGS and SG&A totaling $212,765, depreciation expense of $122,525,...

Lizard Lick Towing has sales of $601,506, COGS and SG&A totaling $212,765, depreciation expense of $122,525, and taxes paid of $80,400. A partial listing of its balance sheet accounts is as follows:

	Beginning Balance	Ending Balance
Current Assets	$131,700	$119,600
Net Fixed Assets	$712,500	$689,200
Current Liabilities	$108,900	$122,100
Long-Term Debt	$796,000	$830,500

What is the amount of Lizard Lick's cash flow from assets?

Expert Solution

Change in Net Working Capital = Ending Net Working Capital - Beginning Net Working Capital
Change in Net Working Capital = (Ending Current Assets - Ending Current Liabilities) - (Beginning Current Assets - Beginning Current Liabilities)
Change in Net Working Capital = ($119,600 - $122,100) - ($131,700 - $108,900)
Change in Net Working Capital = -$25,300

Net Capital Spending = Ending Net Fixed Assets + Depreciation - Beginning Net Fixed Assets
Net Capital Spending = $689,200 + $122,525 - $712,500
Net Capital Spending = $99,225

EBIT = Sales - COGS and SG&A - Depreciation Expense
EBIT = $601,506 - $212,765 - $122,525
EBIT = $266,216

Operating Cash Flow = EBIT + Depreciation - Taxes
Operating Cash Flow = $266,216 + $122,525 - $80,400
Operating Cash Flow = $308,341

Cash Flow from Assets = Operating Cash Flow - Net Capital Spending - Change in Net Working Capital
Cash Flow from Assets = $308,341 - $99,225 - (-$25,300)
Cash Flow from Assets = $234,416

jeff jeffy answered 4 months ago

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