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Cusic Industries had the following operating results for 2019: sales = $34,419; cost of goods sold...

Cusic Industries had the following operating results for 2019: sales = $34,419; cost of goods sold = $24,261; depreciation expense = $6,007; interest expense = $2,715; dividends paid = $2,005. At the beginning of the year, net fixed assets were $19,950, current assets were $7,061, and current liabilities were $3,998. At the end of the year, net fixed assets were $24,511, current assets were $8,690, and current liabilities were $4,682. The tax rate was 23 percent.

  

a. What is net income for 2019? (Do not round intermediate calculations.)
b. What is the operating cash flow for 2019? (Do not round intermediate calculations.)
c.

What is the cash flow from assets for 2019? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations.)
d-1.

If no new debt was issued during the year, what is the cash flow to creditors? (Do not round intermediate calculations.)
d-2.

If no new debt was issued during the year, what is the cash flow to stockholders? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations.)

PLEASE SHOW WORK, THANK YOU!!!

Solutions

Expert Solution

Answer to Requirement b.

Operating Cash Flow (OCF) = EBIT + Depreciation – Taxes
Operating Cash Flow (OCF) = $4,151 + $6,007 - $330.28
Operating Cash Flow (OCF) = $9,827.72 or $9,828

Answer to Requirement c.

Cash Flow from Assets = OCF – Net Capital Spending – Change in Working Capital

Net Capital Spending = Ending Fixed Assets – Beginning Fixed Assets + Depreciation
Net Capital Spending = $24,511 - $19,950 + $6,007
Net Capital Spending = $10,568

Change in Working Capital = (Ending Current Assets – Ending Current Liabilities) – (Beginning Current Assets – Beginning Current Liabilities)
Change in Working Capital = ($8,690 - $4,682) – ($7,061 - $3,998)
Change in Working Capital = $945

Cash Flow from Assets = $9,828 - $10,568 - $945
Cash Flow from Assets = -$1,685

Answer to Requirement d-1.

Cash Flow to Creditors = Interest – Net New Borrowings
Cash Flow to Creditors = $2,715 - $0
Cash Flow to Creditors = $2,715

Answer to Requirement d-2.

Cash Flow to Stockholders = Cash Flow from Assets - Cash Flow to Creditors
Cash Flow to Stockholders = -$1,685 - $2,715
Cash Flow to Stockholders = -$4,400

jeff jeffy answered 1 year ago
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