Question

Graffiti Advertising, Inc., reported the following financial statements for the last two years.
  

2016 Income Statement
Sales	$	567,700
Costs of goods sold		274,000
Selling and administrative		124,728
Depreciation		54,571
EBIT	$	114,401
Interest		19,406
EBT	$	94,995
Taxes		37,998
Net income	$	56,997
Dividends	$	10,100
Addition to retained earnings	$	46,897

GRAFFITI ADVERTISING, INC. Balance Sheet as of December 31, 2015
Cash	$	13,370		Accounts payable	$	9,499
Accounts receivable		18,989		Notes payable		14,503
Inventory		13,799		Current liabilities	$	24,002
Current assets	$	46,158
				Long-term debt	$	136,400
Net fixed assets	$	344,576		Owner's equity	$	230,332
Total assets	$	390,734		Total liabilities and owners’ equity	$	390,734

GRAFFITI ADVERTISING, INC. Balance Sheet as of December 31, 2016
Cash	$	14,356		Accounts payable	$	10,517
Accounts receivable		21,094		Notes payable		16,471
Inventory		22,759		Current liabilities	$	26,988
Current assets	$	58,209
				Long-term debt	$	152,500
Net fixed assets	$	406,306		Owner's equity	$	285,027
Total assets	$	464,515		Total liabilities and owners’ equity	$	464,515

a. Calculate the operating cash flow. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
  
Operating cash flow            $
  
b. Calculate the change in net working capital. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
  
Change in net working capital            $
  
c. Calculate the net capital spending. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
  
Net capital spending            $
  
d. Calculate the cash flow from assets. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
  
Cash flow from assets            $

e. Calculate the cash flow to creditors. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
  
Cash flow to creditors            $

f. Calculate the cash flow to stockholders. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
  
Cash flow to stockholders            $

Answer 1

Req a:
Operating cashflows:
Net income			56997
Add; Interest expense			19406
Add: Depreciation expenses			54571
Operating cashflows:			130974
Req b:
Change in Net Working capital:
Increase in cash (14356-13370)				986
Increase in AR (21094-18989)				2105
Increase in Invntory (22759-13799)				8960
Increase in AP (10517-9499)				-1018
Increase in Notes payable (16471-14503)				-1968
Net Increase in Working capital				9065
Reqc:
Beginning balance of FA			344576
Less: Depreciation			-54571
Required balance of FA			290005
Ending Balance of FA			406306
Net capital spending on FA				116301
Req d:
Cash flows from Assets:
Operating cashflows			130974
Net Increase in WC			-9065
Net capital spending on FA			-116301
Cashflows from Assets			5608
Req e.
Cashflows to Creditors:
Interest paid			19406
Borrowing from LTD			-16100
	(152500-136400)
Cashflows to Creditors:			3306
Req f:
Cashflows to Stockkholders:
Dividend paid			10100
Increase in Equity			-7798
(230332+46897-285027)
Cashflows to Stockkholders:			2302