Class: Financial Management

Problem 2-21 Accounting values versus cash flow

During 2017, Raines Umbrella corp. had the following:

Sales$ 670,000

Cost of Goods sold$450,000

Administrative and selling expenses$ 90,000

Depreciation$ 160,000

In addition, the company had an interest expense of $ 92,000 and a tax rate of 35 percent (ignore tax loss carryback or carryforward provisions).

Suppose the company paid out $ 56,000 in cash dividends, is this possible? If net capital spending and the change in net working capital were both zero, and if no new stock was issued during the year, what was the net new long-term debt?

Net new long-term debt =