4. What is the cash flow from assets for 2011?

Do you believe that the bank’s policy concerning a minimum total-assets-to-debt ratio can be modified to consider financing techniques that are not reflected on the financial statements?
January 3, 2018
What do those ratios reveal about the company and its ability to meet its obligations on its long-term liabilities?
January 3, 2018

4. What is the cash flow from assets for 2011?

Finance Basics

Galaxy Interiors
2011 Income Statement
(5 in millions)

Net sales

Suits

Cost of goods sold

16,408

Deprecation

1,611

Earnings before interest and taxes

3,396

Interest paid

1,282

Taxable Income

$2,114

Less: Taxes

740

Net income

$1,374

Galaxy Interiors
2010 and 2011 Balance Sheets
($ in millions)

 

2010

2011

 

2010

2011

Cash

$668

$297

Accounts payable

$1,694

1,572

Accounts receivable

1,611

1,527

Notes payable

2,500

0

Inventory

3,848

2,947

Total

$4,194

$1,532

Total

$6,127

$4,771.00

Long-term debt

9,800

10,650

Net fixed asses

17,489

17,107

Common stock

7,500

7,000

 

Retained earnings

2,122

2,696

Total assets

$23,616

$21,878

Total liab. & equity

$23,616

$21,878

  1. What is the operating cash flow for 2011? OCF in 2011 = EBIT + DEPRECIATION – TAX

  2. What is the amount of net capital spending for 2011? Net capital spending = Fixed asset in 2011 – Fixed asset in 2010 + Depreciation in 2011

  3. What is the net investment on working capital in 2011 (Change in net working capital)?

Change in NWC = NWC in 2011 – NWC in 2010 = (CA in 2011 – CL in 2011) – ( CA in 2010 – CL in 2010)

  1. What is the cash flow from assets for 2011?

Cash flow from assets = OCF – Net capital spending – Change in NWC

  1. What is the cash flow to creditors in 2011?

Cash flow to creditors = interest expense in 2011 – (long term debt in 2011 – long term debt in 2010)

  1. What is the cash flow to stockholders in 2011? cash flow to stockholders = cash flow from asset – cash flows to creditors
 

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