In: Finance
Money Badger and Associates, P.C. has sales of $407,184, COGS and SG&A totaling $206,874, depreciation expense of $103,325, 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 Money Badger's cash flow from assets?
Answer:
EBIT = Sales – COGS and SG&A – Depreciation
EBIT = $407,184 - $206,874 - $103,325
EBIT = $96,985
Operating Cash Flow = EBIT + Depreciation – Taxes
Operating Cash Flow = $96,985 + $103,325 - $80,400
Operating Cash Flow = $119,910
Net Capital Spending = Ending Net FA – Beginning Net FA +
Depreciation
Net Capital Spending = $689,200 - $712,500 + $103,325
Net Capital Spending = $80,025
Net Working Capital = Current Assets – Current Liabilities
Ending Net Working Capital = $119,600 - $122,100
Ending Net Working Capital = -$2,500
Beginning Net Working Capital = $131,700 - $108,900
Beginning Net Working Capital = $22,800
Change in Net Working Capital = Ending Net Working Capital –
Beginning Net Working Capital
Change in Net Working Capital = -$2,500 - $22,800
Change in Net Working Capital = -$25,300
Cash Flow from Assets = Operating Cash Flow - Net Capital
Spending - Change in Net Working
Capital
Cash Flow from Assets = $119,910 - $80,025 – (-$25,300)
Cash Flow from Assets = $65,185