Question

Calculate the cash flow from assets, cash flow to creditors, and cash flow to stockholders

DATA
Balance Sheet:	2009	2010
Cash	$15,000	$14,000
Marketable Securities	6,000	6,200
Receivables	42,000	33,000
Inventory	51,000	84,000
Prepaid expenses	1,200	1,100
Total current assets	115,200	138,300
Gross plant and equipment	316,000	330,000
Less: accumulated depreciation	(30,000)	-60,000
Total assets	$401,200	$408,300
	2009	2010
Accounts payable	$48,000	$57,000
Accruals	6,000	5,000
Notes payable	15,000	13,000
Total current liabilities	69,000	75,000
Long-term debt	160,000	150,000
Common stock	172,200	183,300
Total liabilities and equity	$401,200	$408,300
Sales		$600,000
Cost of goods sold		460,000
Gross profit		140,000
Less: Operating and interest expenses:
General and administration	30,000
Interest	10,000
Depreciation	30,000
Total Operating and interest expenses		70,000
Earnings before taxes		70,000
Less: Taxes		27,100
Net income available to common stockholders		42,900
Less: Cash dividends		31,800
Change in Retained earnings		$11,100

1. What is the average tax rate?

2. What is the amount of the net working capital for 2010

3. What is the book value of the equity as of 2010?

4. What is the amount of non-cash expenses?

5. What is the change in net working capital?

6. What is the operating cash flow?

7. What is the amount of net capital spending?

8. What is the cash flow from assets?

9. What is the cash flow to creditors?

10.   What is the cash flow to stockholders?

Answer 1

1)Average taxrate = total tax / earning before tax * 100

=27100/70000*100 = 38.71%

2)net working capital for 2010 = total current assets -total current liabilities

= 138300-75000 = 63,300

3)Book value of equity in 2010 =183300-11100= 172,200

4)Amount of non-cash expenses =depreciation amount = 30000

5)change in net working capital = net working capital of 2010- net working capital of 2009

net working capital of 2009= current assets - current liabilities

=115200-69000= 46,200

change in net working capital=63,300-46200 =17,100

6)operating cash flow= operating income +depreciation- taxes + change in working capital

=70000+30000-27100+17100

= 90,000

7)net capital spending = fixed assets value in 2010- fixed assets value in 2009 - depreciation

=330000-316000-30000= -16000

8) cash flow from assets=operating cash flow - change in working capital- net capital spending

=90000-17100-(-16000)

=88,900

9)cash flow to credtors = interest paid - ending long term debt + beginning long term debt

=10000-150000+160000

= 20000

10)cash flow to shareholders = dividend paid - common stockin 2010 + common stock in 2009

=31800-183300+172200

=20700