Question
You are asked to recreate the firm's cash flow statement. The firm had $100,000 in the bank at the end of the prior year and
You are asked to recreate the firm's cash flow statement. The firm had $100,000 in the bank at the end of the prior year and its working capital accounts except cash remain constant during the year. It earned $5 million in net income during the year but paid $750,000 in dividends to common share holders. Throughout the year the firm purchased $5.5 milion of machinery. The annual depreciation expense for the year is $450,000, but the purchase price for the machinery represents additions to property, plant, and equipment before depreciation. The long term debt is $1 million at a 6% interest rate. What was the firm's end of the year cash balance? Recreate the cash flow statement to arrive at your answer.
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