Money Badger and Associates, P.C. has sales of $407,184, COGS and SG&A totaling $206,874, depreciation expense...

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?

Expert Solution

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

jeff jeffy answered 2 years ago

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