Question

Cash flow from assets. Use the data from the following financial statements in the popup​ window,

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. The company paid interest expense of

$ 17 comma 500$17,500

for

20172017

and had an overall tax rate of

40 %40%

for

20172017.

Find the cash flow from assets for

20172017​,

and break it into its three​ parts: operating cash​ flow, capital​ spending, and change in net working capital.

The operating cash flow is

​$nothing.

Partial Income Statement Year Ending 2017
Sales revenue	$349,800
Cost of goods sold	$141,900
Fixed costs	$43,000
Selling, general, and administrative expenses	$28,200
Depreciation	$45,800

​(Click on the following icon

  

in order to copy its contents into a​ spreadsheet.)

Partial Balance Sheet 12/31/2016
ASSETS		LIABILITIES
Cash	$15,900	Notes payable	$13,800
Accounts receivable	$28,200	Accounts payable	$18,900
Inventories	$47,800	Long-term debt	$190,000
Fixed assets	$367,800	OWNERS' EQUITY
Accumulated depreciation	$140,400	Retained earnings
Intangible assets	$82,100	Common stock	$131,800

​(Click on the following icon

  

in order to copy its contents into a​ spreadsheet.)

Partial Balance Sheet 12/31/2017
ASSETS		LIABILITIES
Cash	$26,200	Notes payable	$12,200
Accounts receivable	$19,200	Accounts payable	$23,800
Inventories	$53,200	Long-term debt	$162,200
Fixed assets	$448,200	OWNERS' EQUITY
Accumulated depreciation		Retained earnings
Intangible assets	$82,100	Common stock	$182,000

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Answer 1

EBIT = Sales revenue - Cost of goods sold - Fixed costs - Selling, general and administrative expenses - Depreciation
EBIT = $349,800 - $141,900 - $43,000 - $28,200 - $45,800
EBIT = $90,900

EBT = EBIT - Interest expense
EBT = $90,900 - $17,500
EBT = $73,400

Taxes = EBT * Tax Rate
Taxes = $73,400 * 40%
Taxes = $29,360

Operating Cash Flow = EBIT + Depreciation - Taxes
Operating Cash Flow = $90,900 + $45,800 - $29,360
Operating Cash Flow = $107,340

Change in Net Working Capital = Net Working Capital, 2017 - Net Working Capital, 2016
Change in Net Working Capital = (Current Assets, 2017 - Current Liabilities, 2017) - (Current Assets, 2016 - Current Liabilities, 2016)
Change in Net Working Capital = ($26,200 + $19,200 + $53,200 - $12,200 - $23,800) - ($15,900 + $28,200 + $47,800 - $13,800 - $18,900)
Change in Net Working Capital = $3,400

Net Capital Spending = Gross Fixed Assets, 2017 - Gross Fixed Assets, 2016
Net Capital Spending = $448,200 - $367,800
Net Capital Spending = $80,400

Cash Flow from Assets = Operating Cash Flow - Net Capital Spending - Change in Net Working Capital
Cash Flow from Assets = $107,340 - $80,400 - $3,400
Cash Flow from Assets = $23,540