(Computing free cash flows and financing cash flows) Use the balance sheet, and income statement, for Abrahams Manufacturing Company to compute the firm's free cash flows and the financing cash flows, and interpret your results. Data Table - Data Table Additional Information 1. The only entry in the accumulated depreciation account is for 2018 depreciation. 2. The firm paid $21,576 in common stock dividends during 2018. Calculate the free cash flows using the following table. (Round to the nearest dollar. NOTE: Input cash inflows as positive values and cash outflows as negative values.) Abrahams Manufacturing Company Income Statement for the Year Ended 1/31/2018 FREE CASH FLOWS 2018 After-tax cash flows from operations Sales $ $ 190,000 52.000 S 138.000 46.000 30.000 S After-tax cash flows from operations Change in net operating working capital $ S Abrahams Manufacturing Company Balance Sheet for 1/31/2017 and 1/31/2018 2017 2018 Cash $ 89,000 $ 103,000 Accounts receivable 64,000 69 200 Inventory 112,000 113,800 10,000 10.000 Prepaid expenses Total current assets $ 275,000 S 296,000 Gross plant and equipment 238,000 306,000 Accumulated depreciation (40,000) (70,000) S473.000 532.000 $ Total assets Accounts payable $ 85,000 S 93,000 Accrued liabilities 68,000 60,000 Total current debt S 153,000 S 153,000 Mortgage payable 70,000 0 Preferred stock 0 126,000 Common stock 205,000 205,000 45,000 48,000 Retained earnings $ 473,000 S 532,000 Total debt and equity Cost of goods sold Gross profit Selling, general and administrative expenses Depreciation expense Operating income Interest expense Eamings before taxes Taxes Preferred stock dividends Earings available to common stockholders 62,000 3,800 $ Increase in net operating working capital S 58 200 18,624 15.000 Free cash flows $ 24,576 Calculate the financing cash flows using the following table. (Round to the nearest dollar. NOTE: Input cash inflows as positive values and cash outflows as negative values.) FINANCING CASH FLOWS Print Done Done $ Print Done Financing cash flows "The firm generated positive cash flows from operations, which were more then used to invest in additional working capital and fixed assets. This resulted in negative free cash flows, which had to be covered by acquiring more money from preferred stockholders." Is the above statement true or false? (Select from the drop-down menu.) (Computing free cash flows and financing cash flows) Use the balance sheet, and income statement, for Abrahams Manufacturing Company to compute the firm's free cash flows and the financing cash flows, and interpret your results. Data Table - Data Table Additional Information 1. The only entry in the accumulated depreciation account is for 2018 depreciation. 2. The firm paid $21,576 in common stock dividends during 2018. Calculate the free cash flows using the following table. (Round to the nearest dollar. NOTE: Input cash inflows as positive values and cash outflows as negative values.) Abrahams Manufacturing Company Income Statement for the Year Ended 1/31/2018 FREE CASH FLOWS 2018 After-tax cash flows from operations Sales $ $ 190,000 52.000 S 138.000 46.000 30.000 S After-tax cash flows from operations Change in net operating working capital $ S Abrahams Manufacturing Company Balance Sheet for 1/31/2017 and 1/31/2018 2017 2018 Cash $ 89,000 $ 103,000 Accounts receivable 64,000 69 200 Inventory 112,000 113,800 10,000 10.000 Prepaid expenses Total current assets $ 275,000 S 296,000 Gross plant and equipment 238,000 306,000 Accumulated depreciation (40,000) (70,000) S473.000 532.000 $ Total assets Accounts payable $ 85,000 S 93,000 Accrued liabilities 68,000 60,000 Total current debt S 153,000 S 153,000 Mortgage payable 70,000 0 Preferred stock 0 126,000 Common stock 205,000 205,000 45,000 48,000 Retained earnings $ 473,000 S 532,000 Total debt and equity Cost of goods sold Gross profit Selling, general and administrative expenses Depreciation expense Operating income Interest expense Eamings before taxes Taxes Preferred stock dividends Earings available to common stockholders 62,000 3,800 $ Increase in net operating working capital S 58 200 18,624 15.000 Free cash flows $ 24,576 Calculate the financing cash flows using the following table. (Round to the nearest dollar. NOTE: Input cash inflows as positive values and cash outflows as negative values.) FINANCING CASH FLOWS Print Done Done $ Print Done Financing cash flows "The firm generated positive cash flows from operations, which were more then used to invest in additional working capital and fixed assets. This resulted in negative free cash flows, which had to be covered by acquiring more money from preferred stockholders." Is the above statement true or false? (Select from the drop-down menu.)
