At the end of the year net fixed asset 16800 current assets were 5930 and

At the end of the year net fixed asset 16800 current

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At the end of the year, net fixed asset $16,800, current assets were $5,930, and current liabilities were $3,150. The tax rate for 2009 was 34 percent. a. What is net income for 2009? b. What is the operating cash flow for 2009? c. What is the cash flow from assets for 2009? Is this possible? Explain. d. If no new debt was issued during the year, what is the cash flow to creditors? What is the cash flow to stockholders? Explain and interpret the positive and negative signs of your answers in (a) through (d).
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5 #3: Income Statement Sales $22,800 Cost of goods sold 16,050 Depreciation 4,050 EBIT $ 2,700 Interest 1,830 Taxable income $ 870 Taxes (34%) 296 Net income $ 574 b . What is the operating cash flow for 2009? OCF = EBIT + Depreciation (EBIT*tax rate) = $2700 + $4,050 $918 = $5,832 a . What is net income for 2009 ?
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6 c . What is the cash flow from assets for 2009? Is this possible? Explain. CFFA = OCF Change in NOWC Net capital spending NOWC = Current assets Non-interest bearing Current liabilities Change in NOWC = NOWC end NOWC beg = (CA end CL end ) (CA beg CL beg ) = ($5,930 3,150) ($4,800 2,700) = $2,780 2,100 = $680; assuming that the current liabilities are non-interest bearing Net capital spending = net FA end net FA beg + Depreciation = $16,800 13,650 + 4,050 = $7,200 CFFA = OCF Change in NOWC Net capital spending = $5,832 680 7,200 = $2,048 (is this possible?) CFFA is negative because the firm invested heavily in both fixed assets and net working capital resulting in negative CFFA
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