Yosemite Enterprises 2016 and 2017 Partial Balance Sheets As

Yosemite Enterprises 2016 and 2017 Partial Balance Sheets Assets 20162017 Liabilities and Owners Equity Current assets Net fixed assets Current Liab.s L/T Debt S600 $800 4,000 7,000 S1,000 S1,800 6,000 9,000 Yosemite Enterprises 2017 Income Statement Sales Costs Depreciation Interest Paid $40,000 30,000 2,000 400 What is owners\' equity for 2016 and 2017? What is the change in net working capital for 2017? What is Operating Cash Flow for 2017? (The tax rate is 21%.) What is Yosemite\'s Net Capital Spending in 2017? (Check your understanding (optional, not for credit): In 2017, Yosemite purchases $6000 in new fixed assets How much in fixed assets did Yosemite sell?) What is Yosemite\'s cash flow from assets for 2017? What is cash flow to the creditors in 2017? (Check your understanding (optional, not for credit): During 2017, Yosemite raised S4000 in new long-term debt. How much long-term debt must Yoesmite have paid off during the year?) During 2017, Yosemite paid S5404 in dividends, repurchased equity of $1000 and made no new equity issues. What is cash flow to equity-holders for 2017? Construct a Statement of Financial Cash Flow for Yosemite for 2017, following Table 2.5 in the book. a. b. c. d. e. f. g. h.

Solution

a) Owner\'Equity for 2016 is

Owner\'s Equity = Total Assets - Total Liability

= (Current Assets+Net Fixed Assets) - (Current Liability+L/T Debt)

= ($1000+$6000) - ($600+$4000)

= $7000 - $4600

= $2400

Owner\'s Equity For 2017

Owner\'s Equity = Total Assets - Total Liability

Owner\'s Equity = (Current Assets+Net Fixed Assets) - (Current Liability+L/T Debt)

Owner\'s Equity = ($1800+$9000) - ($800+$7000)

Owner\'s Equity =$10800-$7800

Owner\'s Equity = $3000

b) Change in Net Working Capital For 2017

Working Capital For 2016 = Current Assets - Current Liability

= $1000 - $600

= $400

Working Capital For 2017 = Current Assets - Current Liability

= $1800-$800

= $1000

Change In Working Capital In 2017 = Working Capital For 2017 - Working Capital for 2016

= $1000 - $400

= $600

c) Calculation of operating cash flow for 2017

For Operating Cash flow we have to calculate Net profit before taxation, and extraordinary item

= Sales - Costs - Depriciation - Interest Paid

= $40000 - $30000 - $2000 - $400

= $7600

Now,

Operating Cash Flow statement :

Net profit before taxation, and extraordinary item $7600

ADD : Depriciation $2000

ADD : Interest Paid $400

Operating profit before working capital changes $10000

Increase in current assets ($800)

Increase in current liability $200

Cash generated from operations $9000

Less : Income tac Paid (7600*21%) $1596

Net cash from operating activities $7404

d) Calculation of net capital spending

Opening Fixed Assets $6000

Add : Purchase $6000

Less : Depriciation ($2000)

Less : Closing Fixed Assets ($9000)

Fixed Assests Sold During the year $1000

Net Capital Spending in 2017 is = Closing fixed assets - Opening fixed assets + Depriciation

= $9000 - $6000 + $2000

= $5000

e) Cash Flow From Assets = Operating Cash Flow - Capital Spending Addition to Net Working Capit

= 7404 - 5000 - 600

= $1804

f) Cash flow to the creditors

= Interest Expense - Ending long term Debts + Begning long term debts

= 400 - 7000+ 4000

= -2600

Long term debt paid off by yosemite is

= Opening L/T Debts +Debt Raised - Closing L/T Debt

= 4000 + 4000 - 7000

= $1000

= 7404 - 5000 - 600 = $1804 f) Cash flow to the creditors = Interest Expense - Ending long term Debts + Begning long term debts = 400 - 7000+ 4000 = -2600 Long term debt paid off by yosemite is = Opening L/T Debts +Debt Raised - Closing L/T Debt = 4000 + 4000 - 7000 = $1000