1. Calculating cash flows For 2017, calculate the cash flow from assets, cash flow to creditors, and...

Question

1. Calculating cash flows For 2017, calculate the cash flow from assets, cash flow to creditors, and cash flow to shareholders (assume a corporate tax rate of 34%.)
(Unit: $ USD)
2. Calculating Cash Flows Consider the following a
eviated financial statements for Berea Fireworks:
(unit: £ GBP sterling)

a. What is the owners’ equity for 2016 and 2017?
. What is the change in net working capital for 2017?
c. In 2017, Berea Fireworks purchased £1,500 in new fixed assets. How much in fixed assets did Berea Fireworks sell? What is the cash flow from assets for the year?
d. During 2017, Berea Fireworks raised £300 in new long-term debt. How much longterm debt must Berea Fireworks have paid off during the year? What is the cash flow to creditors?

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calculating-cash-flows-for-2017-4kkeotls.docx

Khushboo · Accepted Answer

Solution 1:
Balance sheet and Income statement of the Entity:
	 Particulars
	2016
	2017
	Cash
	2107
	2155
	Accounts receivable
	2789
	3142
	Inventory
	4959
	5096
	Net fixed assets
	17669
	18091
	Total assets
	27524
	28484
	Liabilities
	 
	 
	Short term notes payable
	407
	382
	Accounts payable
	2213
	2146
	Long term debt
	7056
	8232
	Total liabilities
	9676
	10760
	Owners equity
	17848
	17724
INCOME STATEMENT
	 Particulars
	2016
	2017
	Sales
	4018
	4312
	Less: COGS
	1382
	1569
	Gross Profit
	2636
	2743
	Depreciation
	577
	578
	Other expenses
	328
	274
	Interest
	269
	309
	Profit before tax
	1462
	1582
	Tax @34%
	497
	538
	Net Income
	965
	1044
	Less: dividend
	488
	532
	Retained earning
	477
	512
Now,
Cash from assets = Cash flow to creditors + Cash flow to stockholders.
Calculation of cash flow to creditors:
	 Particulars
	Amount 
	Interest paid
	309
	New borrowings (long term debt)
	-1176
	Total
	-867
Cash flow from assets = Operating cash flows – Capital Spending – Change Net working Capital
Calculation of cash flow from assets:

1. Calculating cash flows For 2017, calculate the cash flow from assets, cash flow to creditors, and cash flow to shareholders (assume a corporate tax rate of 34%.) (Unit: $ USD) 2. Calculating Cash...

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