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Use the following information for Ingersoll, Inc., (assume the tax rate is 40 percent):      2014...

Use the following information for Ingersoll, Inc., (assume the tax rate is 40 percent):

    

2014 2015
  Sales $ 8,035 $ 8,609
  Depreciation 1,145 1,146
  Cost of goods sold 2,716 3,080
  Other expenses 659 554
  Interest 545 623
  Cash 4,129 5,223
  Accounts receivable 5,459 6,147
  Short-term notes payable 814 766
  Long-term debt 13,680 16,250
  Net fixed assets 34,655 35,517
  Accounts payable 4,356 4,205
  Inventory 9,690 9,958
  Dividends 976 1,071

   

For 2015, calculate the cash flow from assets, cash flow to creditors, and cash flow to stockholders. (Do not round intermediate calculations. A negative answer should be indicated by a minus sign. Round your answers to 2 decimal places, e.g., 32.16.)

  

      
  Cash flow from assets $   
  Cash flow to creditors $   
  Cash flow to stockholders $   

Solutions

Expert Solution

Answer of Part a:

EBIT = Sales – Cost of Goods Sold – Depreciation – other expenses
EBIT = $8,609 - $3,080 - $1,146 - $554
EBIT = $3,829

EBT = EBIT – Interest
EBT = $3,829 - $623
EBT = $3,206

Tax= EBT * 40%
Tax = $3,206 *40%
Tax = $1,282.40

Operating Cash flow = EBIT + Depreciation – Taxes
Operating Cash Flow = $3,829 + $1,146 - $1,282.4
Operating Cash Flow = $3,692.6

Beginning working capital = Current Assets – Current Liabilities
Beginning Working Capital = ($4,129 + $5,459 + $9,690) – ($814 + $4,356)
Beginning Working Capital = $19,278 - $5,170
Beginning Working Capital = $14,108

Ending Working Capital = Current Assets – Current Liabilities
Ending Working Capital = ($5,223 + $6,147 + $9,958) – ($766 + $4,205)
Ending Working Capital = $21,328 -$4,971
Ending Working Capital = $16,357

Change in Net working capital = Ending Working Capital - Beginning Working Capital
Change in Net working capital = $16,357 - $14,108
Change in Net working capital = $2,249

Net Capital Spending = Ending Fixed Assets – Beginning Fixed Assets + Depreciation
Net Capital Spending = $35,517 - $34,655 + $1,146
Net Capital Spending = $2,008

Cash flow from Assets = Operating Cash flow – change in net working capital – Net capital spending
Cash flow from Assets =$3,692.6 - $2,249 - $2,008
Cash flow from Assets = -$564.4

Answer of Part b:

Cash flow to Creditors = Interest – Ending Long term debt + Beginning long term debt
Cash flow to Creditors = $623 - $16,250 + $13,680
Cash flow to Creditors = -$1,947

Answer of Part c:

Cash flow to stockholders = Cash flow from assets – Cash flow to creditors
Cash flow to stockholders = -$564.4 + $1,947
Cash flow to stockholders = $1,382.6

jeff jeffy answered 1 year ago
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