I will like you to provide answers to the Questions a, b, c, & d, under Question #21 Only. Calculating Cash Flows. And pls show some legible workings on your answers. Thanks!
CHAPTER 2 Financial Statements. Taxes, and Cash Flow 204 21. Cal 21. Calculating Cash Flows. Titan Football Manufacturing had the following operating results for 2014: sales = $23,730; cost of goods sold = $16,780; depreciation expense = $2,840; interest expense = $414; dividends paid = $616. At the beginning of the year, net fixed assets were $16,560, current assets were $2.940, and current liabilities were $2,592. At the end of the year, net fixed assets were $18.840, current assets were $3.528, and current liabilities were $2.484. The tax rate for 2014 was 35 percent. a. What is net income for 2014? b. What is the operating cash flow for 2014? c. What is the cash flow from assets for 2014? Is this possible? Explain. d. If no new debt was issued during the year, what is the cash flow to creditors? What is the cash flow to stockholders? Explain and interpret the positive and negative signs of your answers in (a) through (d). 22. Calculating Cash Flows. Consider the following abbreviated financial statements for Cabo Wabo, Inc.: 204 CABO WABO, INC. Partial Balance Sheets as of December 31, 2013 and 2014 2013 2014 2013 2014 Liabilities and Assets Owners' Equity Current assets $ 3,198 $ 3,389 Current liabilities $1,381 $2,030 Net fixed assets 14,826 15,500 Long-term debt 8,086 9,434 CABO WABO, INC. 2014 Income Statement Sales $47,842 Costs 23,992 Depreciation 4,040 Interest paid 750 a. What is owners' equity for 2013 and 2014? b. What is the change in net working capital for 2014? c. In 2014, Cabo Wabo purchased $8,424 in new fixed assets. How much in fixed assets did Cabo Wabo sell? What is the cash flow from assets for the year? (The tax rate is 40 percent.) d. During 2014, Cabo Wabo raised $2,535 in new long-term debt. How much long- term debt must Cabo Wabo have paid off during the year? What is the cash flow to creditors? 23. Cash Flow Identity. Graffiti Advertising, Inc., reported the following financial statements for the last two years. Construct the cash flow identity for the company. Explain what each number means. LO 4 2014 Income Statement Sales Cost of goods sold Selling & administrative Depreciation EBIT Interest EBT Taxes Net income Dividends Addition to retained earnings $621,720 334,427 137,206 60,033 $ 90,054 21,226 $ 68,828 27,531 $ 41,297 S 15,600 $ 25,697
