The cash flow identity

The cash flow identity - 260 310 Inventory 320 385 Total $...

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The cash flow identity Cash flow from assets = Cash flow to creditors (bondholders) + Cash flow to stockholders (owners) where Cash flow to creditors = Interest paid – Net new borrowing Cash flow to stockholders = Dividends paid – Net new equity raised Cash flow from assets = Operating cash flow – Net capital spending – Additions to net working capital (NWC) where Operating cash flow = Earnings before interest and taxes (EBIT) + Depreciation – Taxes Net capital spending = Ending net fixed assets – Beginning net fixed asset + Depreciation Change in NWC = Ending NWC – Beginning NWC
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Balance Sheet As of December 31 ($ in thousands) Assets 2005 2006 Current assets Cash $ 45 $ 50 Accounts receivable
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Unformatted text preview: 260 310 Inventory 320 385 Total $ 625 $ 745 Fixed assets Net plant and equipment 985 1100 Total assets $1610 $1845 Liabilities and equity 2005 2006 Current liabilities Accounts payable $ 210 $ 260 Notes payable 110 175 Total $ 320 $ 435 Long-term debt 205 225 Stockholders equity Common stock and paid-in surplus 290 290 Retained earnings 795 895 Total $1085 $1185 Total liabilities and equity $1610 $1845 Income Statement Net sales $710.00 Cost of goods sold 480.00 Depreciation 30.00 Earnings before interest $200.00 and taxes (EBIT) Interest 20.00 Taxable income 180.00 Taxes 53.45 Net income $126.55 Dividends 26.55 Addition to retained earnings $100.00...
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The cash flow identity - 260 310 Inventory 320 385 Total $...

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