Lizard Lick Towing has sales of $504,855, COGS and SG&A totaling $241,314, depreciation expense of $67,718,...

Lizard Lick Towing has sales of $504,855, COGS and SG&A totaling $241,314, depreciation expense of $67,718, 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 I $119,600

Net Fixed Assets $712,500 I $689,200

Current Liabilities $108,900 I $122,100

Long-Term Debt $796,000 I $830,500

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

Expert Solution

EBIT = Sales - COGS and SG&A - Depreciation Expense
EBIT = $504,855 - $241,314 - $67,718
EBIT = $195,823

Operating Cash Flow = EBIT - Taxes Paid + Depreciation Expense
Operating Cash Flow = $195,823 - $80,400 + $67,718
Operating Cash Flow = $183,141

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 Expense - Beginning Net Fixed Assets
Net Capital Spending = $689,200 + $67,718 - $712,500
Net Capital Spending = $44,418

Cash Flow from Assets = Operating Cash Flow - Net Capital Spending - Change in Net Working Capital
Cash Flow from Assets = $183,141 - $44,418 - (-$25,300)
Cash Flow from Assets = $164,023

jeff jeffy answered 1 year ago

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