Use Dynastatics' pro forma income statements and balance sheet from problem 32(a) to assess the cash flows for each forecast year.

a. What is the capital expenditure each year?
b. Start the statement of cash flow with net income. Look at Chapter 3 for the structure of the statement of cash flow.
c. Calculate the cash flow from assets and the financing flow (cash flow to bondholders and shareholders), treating interest as an operating expense. See Chapter 3 for help with this.
d. Calculate the cash flow from assets and the financing flow (cash flow to bondholders and shareholders) treating after-tax interest expense as a cash flow to bondholders.

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в с Н 1 Model Inputs Base Year Formula for Column G Income Statement 2014 2015 2016 3 Sales growth rate 0.4 2,420.0 =F3"(1+$B$3) 2,178.0 =G3*$B$8 2,200.0 Revenue 2,000 0.1 4 Tax rate 1,800 1,980.0 Cost of goods sold 5 Interest rate 6 NWC/sales 7 Fixed assets/sales 0.4 8 COGS/sales 200 220.0 242.0 =G3-G4 0.1 EBIT 46.4 =$B$5*F20 0.1 40.0 Interest expense 40 Earnings before taxes 160 180.0 =G5-G6 195.6 =$B$4*G7 0.9 Taxes 64 72.0 78.2 96 108.0 117.4 =G7-G8 9 Payout ratio 2/3 Net income Dividends Addition to retained earnings =G9*$B$9 =G9-G10 10 64 72.0 78.2 11 32 36.0 39.1 12 Balance Sheet (year-end) 13 14 Assets: Net operating working capital Property, plant & equipment Total assets 242.0 =$B$6*G3 968.0 =$B$7*G3 15 200 220.0 800 880.0 16 1,100.0 =G15+G16 17 1,000 1,210.0 18 Liabilities and equity: 19 Long-term debt (note a) Shareholders' equity (note b) Total liab. & share. equity 20 400 464.0 534.9 =F20+G24 21 675.1 =F21+G11 600 636.0 1,210.0=G20+G21 1,000 1,100.0 23 Required external financing 70.9 24 64.0 =G17-F17-G11 25 26 27 Notes 28 (a) Long-term debt, the balancing item, increases by required external financing. 29 (b) Shareholders' equity equals its value in the previous year plus addition to earnings retained for the year. 30