Question

What is the Cash flow from Assets?
What is the OCF?
What are the changes in NWC?
What are the Net New Borrowing from Creditors and from Owners?

BALANCE SHEET - 2017 & 2018
ASSETS						LIABILITIES and OWNERS EQUITY
		2017		2018				2017		2018
Current Assets						Current Liabilities
Cash		200		210		Accounts Payable		180		185
A/R		300		290		Notes Payable		230		195
Inventory		250		300		Total Current Liabilities		410		380
Total Current Assets		750		800
						Long-Term Debt		245		255
Fixed Assets
Fixed Assets		500		550		Owner's Equity		595		715
						Common Stock		295		335
						Retained Earnings		300		380
TOTAL ASSETS		1250		1350		TOTAL LIABILITIES and OWNERS EQUITY		1250		1350

INCOME STATEMENT - 2018
Sales		4500
Cost		2950
Depreciation		300
Earnings before Interest and Tax (EBIT)		1250
Interest		350
Earnings before Tax (EBT) - Taxable Income		900
Tax (30%)		270
Net Income		630
Dividend		550
Add. To Retained Earnings		80

Answer 1

1)	Cash flow from assets = OCF-Net Capital expenditure-Change in NWC
	OCF = EBIT+Depreciation-Taxes = 1250+300-270 =	$               1,280
	Net capital expenditure = Ending net fixed assets-Beginning net fixed assets+Depreciation = 550-500+300 =	$                   350
	Change in NWC = (800-380)-(750-410) =	$                     80
	CFFA = 1175-350-80 =	$                   850
2)	Cash flow to stockholders = Dividend+Beginning common stock-Ending common stock = 550+295-335 =	$                   510
3)	Cash flow to creditors = Interest expense+Beginning long term loan-Ending long term loan = 350+245-255 =	$                   340
	Cash flow to creditors and stockholders	$                   850
4)	Net new borrowing from creditors = 255-245 =	$               10.00
	Net new borrowing from stockholders= 335-295 =	$               40.00
	Net new borrowing from creditors and owners	$               50.00