Question

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	$

Answer 1

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