Question

For Questions 1 through 6, please use the following information:

Princess Tools Inc (2009) [2010]

Sales (5800) [6500] Cogs (3670) [4038] Current liabilities (703) [1055] Depreciation (125) [122] Cash (270) [300] Accounts Receivable (1045) [1234] Net fixed Assets (3008) [3342] Inventory (1474) [1533] Interest (290) [200] Taxes (600) [680] Common stock (2400) [2600] Long term debt (2500) [1200] Dividends (100) [100]

1. What is the Cash Flow to Creditors for 2010?

2. What is the Cash Flow to Stock Holders for 2010?

3. What is the Cash flow From Assets for 2010?

4. What is the Operating Cash Flow for 2010?

5. What is the Net Capital Spending for 2010?

6. What is the Change in Net Working Capital for 2010?

Answer 1

1. Cash Flow to Creditors for 2010
Cash Flow to Creditors = Interest Expenses - Ending Long term Debts + Beginning Long term Debts
= 200-1200+2500
= 1500
2. Cash flow to Stock holders for 2010
Cash Flow to Stock Holders = Dividend paid - Ending Common Stock + Beginning Capital Stock
= 100-2600+2400
=-100
3. Cash Flow from Assets for 2010
Cash flow from Assets = Operating Cash flow - Capital Spending - Change in NWC
= 1782-456+74
= 1400
Cash flow from Assets = Cash flow to Creditors+Cash Flow to Stockholders
= 1500-100
= 1400
4. Operating Cash Flow for 2010
Operating Cash Flow = EBIT + Depreciation - Taxes
EBIT = Sales - COGS - Depreciation = 6500-4038-122=2340
Operating Cash Flow = 2340+122-680
= 1782
5. Net Capital Spending for 2010
Capital Spending = Ending Net fixed assets - Beginning Net Fixed Assets +Depreciation
= 3342-3008+122
= 456
6. Change in Net Working Capital for 2010
Additions to NWC = Ending NWC - Beginning NWC
Ending NWC = Ending Current Assets - Ending Current Liabilities
= (300+1234+1533)-1055
= 3067-1055
= 2012
Beginning NWC = Beginning Current Assets - Beginning Current Liabilities
= (270+1045+1474)-703
= 2789-703
= 2086
Change in NWC = 2012-2086
= -74