Part 2: Problems 2008 2009 sales $7,487 $9,618 Interest paid 735 785 Cost of goods sold...

Part 2: Problems

	2008	2009
sales	$7,487	$9,618
Interest paid	735	785
Cost of goods sold	2,713	3,284
Other costs	592	728
Current assets	3,131	3,383
Current liabilities	564	643
Net fixed assets	8,592	7,517
Long-term debt	1,455	1,698
Dividends paid	120	100
Depreciation	202	263

Answer all the following questions for the year 2009. The tax rate is 35%.

What was net income (NI)?
What was operating cash flow (OCF)?
What was net capital spending (NCS)?
What was the change in net working capital (ΔNWC)?
What was the cash flow from assets (CFA)?

Expert Solution


Answer a
Calculation of net Income for 2009
Sales	$9,618.00
Less : Cost of goods sold	$3,284.00
Gross Margin	$6,334.00
Less : Other Cost	$728.00
Less : Depreciation	$263.00
Operating Income	$5,343.00
Less : Interest Expense	$785.00
Profit before Tax	$4,558.00
Less : Tax @ 35%	$1,595.30
Net Income	$2,962.70

Answer b
Calculation of operating cashflow for 2009
Net Income	$2,962.70
Depreciation	$263.00
Operating Cash flow	$3,225.70

Answer c
Net capital spending
Net Fixed assets for 2008	$8,592.00
Less : Depreciation for 2009	$263.00
Less : Net Fixed Assets for 2009	$7,517.00
Net capital spending	$812.00

Answer d
Change in net working capital
Increase in current assets	-$252.00
Increase in Current Liabilities	$79.00
Change in net working capital	-$173.00

Answer e
Cash flow from assets = Operating Cash flow + Net Capital spending + Change in net working capital
Cash flow from assets = $3,225.70 + $812 - $173 = $3,864.70

jeff jeffy answered 1 year ago

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