Question

Cash flow from assets. Use the data from the following financial statements in the popup​ window, LOADING.... The company paid interest expense of $ 17 comma 300 for 2017 and had an overall tax rate of 40 % for 2017. Find the cash flow from assets for 2017​, and break it into its three​ parts: operating cash​ flow, capital​ spending, and change in net working capital.

Partial Income Statement Year Ending 2017
Sales revenue	$350,100
Cost of goods sold	$142,000
Fixed costs	$43,000
Selling, general, and administrative expenses	$28,200
Depreciation	$46,200

Partial Balance Sheet 12/31/2016
ASSETS		LIABILITIES
Cash	$15,800	Notes payable	$13,800
Accounts receivable	$28,200	Accounts payable	$19,000
Inventories	$48,100	Long-term debt	$190,100
Fixed assets	$368,100	OWNERS' EQUITY
Accumulated depreciation	$141,300	Retained earnings
Intangible assets	$82,100	Common stock	$131,900

Partial Balance Sheet 12/31/2017
ASSETS		LIABILITIES
Cash	$25,900	Notes payable	$11,900
Accounts receivable	$19,100	Accounts payable	$24,200
Inventories	$52,800	Long-term debt	$162,000
Fixed assets	$448,200	OWNERS' EQUITY
Accumulated depreciation		Retained earnings
Intangible assets	$82,100	Common stock	$181,800

Answer 1

Answer:

First let us calculate the net income from partial income statement and other information given:

As such net income = $44,040

Cash flow from assets for 2017 = Cash flow generated by operations + Changes in working capital + Changes in fixed assets

= $90240 - 80100 + 9600

= $19,740

Cash flow from assets for 2017 = $19,740

Workings and break-up as required:

Operating cash flow = Net Income + Depreciation = 44040 + 46200 = $90,240

Capital Spending = Gross Fixed assets as on 12/31/2017 - Gross Fixed assets as on 12/31/2016 = $448,200 - $368,100 = $80,100

Change in net working capital = Decrease in account receivables - Increase in inventory + Increase in accounts payable

= (28200 - 19100) - (52800 - 48100) + (24200 - 19000)

= $9,600

As such:

Cash flow from assets for 2017 = $19,740

Break-up:

Operating cash flow = $90,240

Capital Spending = $80,100

Change in net working capital =$9,600