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Partial Income Statement Year Ending 2014 Sales revenue $350,200 Cost of goods sold $142,000 Fixed costs...

Partial Income Statement Year Ending 2014
Sales revenue	$350,200
Cost of goods sold	$142,000
Fixed costs	$43,000
Selling, general, and administrative expenses	$27,800
Depreciation	$46,000

Partial Balance Sheet 12/31/2013
ASSETS		LIABILITIES
Cash	$15,800	Notes payable	$14,100
Accounts receivable	$28,200	Accounts payable	$19,200
Inventories	$47,900	Long-term debt	$189,800
Fixed assets	$368,100	OWNERS' EQUITY
Accumulated depreciation	$140,200	Retained earnings
Intangible assets	$82,000	Common stock	$131,800

Partial Balance Sheet 12/31/2014
ASSETS		LIABILITIES
Cash	$25,900	Notes payable	$12,200
Accounts receivable	$19,100	Accounts payable	$23,900
Inventories	$52,800	Long-term debt	$162,200
Fixed assets	$447,800	OWNERS' EQUITY
Accumulated depreciation		Retained earnings
Intangible assets	$82,000	Common stock	$181,800

The company paid interest expense of

$17,200

for 2014 and had an overall tax rate of

40%

for 2014. Find the cash flow from assets for 2014, and break it into its three parts: operating cash flow, capital spending, and change in net working capital.

The operating cash flow is

(Round to the nearest dollar.)

Solutions

Expert Solution

Cash flow from assets = operating cash flow - capital spending - chnage in net working capital

Operating cash flow = EBIT + depreciation - tax

Sales revenue	$3,50,200
COGS	$1,42,000
Fixed costs(excluding interest)	$25,800
selling and general and admin costs	$27,800
Depreciation	$46,000
EBIT	$1,08,600
Interest	$17,200
EBT	$91,400
Tax @40%	$36,560

Operating cash flow = 108600 + 46000 - 36560

= $1,18,040

Capital sepnding = Ending net fixed assets - beginning net fixed assets + depreciation

Enfding net fixed assets = 447800 - (140200+46000)

= $2,61,600

Beginning net fixed assets = 368100 - 140200

= $2,27,900

Capital spending = $2,61,600 - $2,27,900 + $46000

= $79,700

Chnage in net working capital = Ending NWC - beginning NWC

Ending NWC = Ending CA - Ending CL

= (25900+19100+52800) - (12200 + 23900)

= $61,700

Beginnigng NWC = (15800 + 28200+47900) - (14100+19200)

= $58600

Change in NWC = 61700 - 58600

= $3100

Therefore Cash flow from assets = $1,18,040 - $79,700 - $3100

= $35,240

jeff jeffy answered 1 year ago

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