In a wildly successful first year in business that started and ended with no required cash, your firm has operating income of $989,000, net income of $637,000, current assets of $900,000, current liabilities of $659,000, net capital expenditures were $690,000, and depreciation was $460,000. The firm has never financed itself with debt. What was your equity valuation cash flow

Question

Business

Franklin Moyer

22 January, 00:18

In a wildly successful first year in business that started and ended with no required cash, your firm has operating income of $989,000, net income of $637,000, current assets of $900,000, current liabilities of $659,000, net capital expenditures were $690,000, and depreciation was $460,000. The firm has never financed itself with debt. What was your equity valuation cash flow

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Answers (1)

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Jennifer Moran · Answer 1

The correct answer is $166,000

Explanation:

According to the scenario, computation of the given data are as follow:-

We can calculate the Equity Valuation Cash Flow by using following formula:-

Equity valuation cash flow = Net income - (Change in non cash - Cash working capital) - (Capital expenditure - Depreciation) + (New debt issued - Debt repayment)

By putting the value, we get

= $637,000 - ($900,000 - $659,000) - ($690,000 - $460,000) + 0

= $637,000 - $241,000 - $230,000

=$166,000

According to the analysis, the equity valuation cash flow is $166,000.