Cardinal Industries had the following operating results for 2018: Sales = $33,71
ID: 2819954 • Letter: C
Question
Cardinal Industries had the following operating results for 2018: Sales = $33,712; Cost of goods sold = $23,918; Depreciation expense = $5,937; Interest expense = $2,680; Dividends paid = $1,942. At the beginning of the year, net fixed assets were $19,880, current assets were $7,012, and current liabilities were $3,956. At the end of the year, net fixed assets were $24,448, current assets were $8,648, and current liabilities were $4,619. The tax rate for 2018 was 21 percent.
a. What is net income for 2018? (Do not round intermediate calculations.)
b. What is the operating cash flow for 2018? (Do not round intermediate calculations.)
c. What is the cash flow from assets for 2018? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.)
d-1. If no new debt was issued during the year, what is the cash flow to creditors? (Do not round intermediate calculations.)
d-2. If no new debt was issued during the year, what is the cash flow to stockholders? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign.)
Explanation / Answer
a)
less:cost of goods sold
b)operating cash flow =EBIT +Depreciation- tax
= 3857+5937-247.17
= 9546.83
C)Net capital spending = Net fixed asset at end -net fixed at beginning+depreciation
= 24448-19880+5937
= 10505
addition to working capital = [Current asset -current liability]end - [Current asset -current liability]beginning
=[8648-4619]-[7012-3956]
= 4029-3056
= 973
cash flow from asset =operating cash flow -capital spending- addition to working capital
= 9546.83 - 10505-973
= - 1931.17
d-)cash flow to creditors = Interest expense - [ending long term debt-beginning long term debt]
= 2680-0
= 2680
d-2)cash flow from asset =cash flow to creditors + cash flow to stockholders
-1931.17 = 2680+ CFS
CFS = -1931.17-2680
= - 4611.17
sales 33712less:cost of goods sold
(23918) Gross margin 9794 less:depreciation expense (5937) EBIT 3857 Less:interest (2680) EBT 1177 less:tax expense[1177*.21] (247.17) Net income 929.83