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19 July, 09:01

Volbeat Corp. shows the following information on its 2015 income statement: sales = $275,000; costs = $188,000; other expenses = $7,900; depreciation expense = $15,200; interest expense = $13,600; taxes = $17,605; dividends = $10,500. In addition, you're told that the firm issued $5,100 in new equity during 2015 and redeemed $3,600 in outstanding long-term debt.

(a) what is the 2015 operating cash flow?

(b) what is the 2015 cash flow to creditors?

(c) what is the 2015 cash flow to stoclkholders?

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  1. 19 July, 12:09
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    Answer: (1) $61,495

    (2) $17,200

    (3) $5,400

    Explanation:

    Given that,

    sales = $275,000

    costs = $188,000

    other expenses = $7,900

    depreciation expense = $15,200

    interest expense = $13,600

    taxes = $17,605

    dividends = $10,500

    new equity issued = $5,100

    Net new long-term debt = $3,600

    EBIT = sales - depreciation expense - costs - other expenses

    = $275,000 - $15,200 - $188,000 - $7,900

    = $63,900

    EBT = EBIT - Interest

    = $63,900 - $13,600

    = $50,300

    EAT = EBT - Taxes

    = $50,300 - $17,605

    = $32,695

    Retained earnings = EAT - Dividends

    = $32,695 - $10,500

    = $22,195

    (1) operating cash flow = EBIT - Taxes + depreciation expense

    = $63,900 - $17,605 + $15,200

    = $61,495

    (2) cash flow to creditors = Interest - Net new long-term debt

    = $13,600 - (-$3,600)

    = $17,200

    (3) cash flow to stock holders = Dividend - net new equity

    = $10,500 - $5,100

    = $5,400
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