Homework SourseYou are researching Time Manufacturing and have found the fo
You are researching Time Manufacturing and have found the following accounting statement of cash flows for the most recent year. You also know that the company paid $99.7 million in current taxes and had an interest expense of $49.7 million.
1. Calculate the operating cash flow. (Do not round intermediate calculations. Enter your answer in millions, e.g., 10.2 million would be entered as 10.2. A negative answer should be indicated by a minus sign. Round your answer to one decimal place, e.g., 32.1.)
Operating cash flow $
2. Calculate the net capital spending. (Do not round intermediate calculations. Enter your answer in millions, e.g., 10.2 million would be entered as 10.2. A negative answer should be indicated by a minus sign. Round your answer to one decimal place, e.g., 32.1.)
Net capital spending $
3. Calculate the change in net working capital. (Do not round intermediate calculations. Enter your answer in millions, e.g., 10.2 million would be entered as 10.2. A negative answer should be indicated by a minus sign. Round your answer to one decimal place, e.g., 32.1.)
Change in net working capital $
4. Calculate the cash flow to creditors. (Do not round intermediate calculations. Enter your answer in millions, e.g., 10.2 million would be entered as 10.2. A negative answer should be indicated by a minus sign. Round your answer to one decimal place, e.g., 32.1.)
Cash flow to creditors $
5. Calculate the cash flow to stockholders. (Do not round intermediate calculations. Enter your answer in millions, e.g., 10 million would be entered as 10. A negative answer should be indicated by a minus sign. Round your answer to nearest whole dollar amount, e.g., 32.)
Cash flow to stockholders $
| TIME MANUFACTURING Statement of Cash Flows ($ in millions) | |||
| Operations | |||
| Net income | $ | 190.0 | |
| Depreciation | 95.7 | ||
| Deferred taxes | 20.7 | ||
| Changes in assets and liabilities | |||
| Accounts receivable | –19.7 | ||
| Inventories | 23.7 | ||
| Accounts payable | 18.7 | ||
| Accrued expenses | –10.7 | ||
| Other | 4.7 | ||
| Total cash flow from operations | $ | 323.1 | |
| Investing activities | |||
| Acquisition of fixed assets | –$ | 198.0 | |
| Sale of fixed assets | 24.7 | ||
| Total cash flow from investing activities | –$ | 173.3 | |
| Financing activities | |||
| Retirement of long-term debt | –$ | 179.0 | |
| Proceeds from long-term debt sales | 133.0 | ||
| Dividends | –103.0 | ||
| Repurchase of stock | –30.0 | ||
| Proceeds from new stock issue | 61.0 | ||
| Total cash flow from financing activities | –$ | 118.0 | |
| Change in cash (on balance sheet) | $ | 31.8 | |
Solution
1) Operating cash flow = Total cash flow from operations (Given) = $ 323.10
2) Net capital spending = Purchase of Fixed Asset - Sale of Fixed Asset = - 198 + 24.70 = -173.30
3) Change in net working capital = Changes in current assets and liabilities = -19.7 +23.7+18.7-10.7+4.7 = 16.7
4) Cash flow to creditors = Changes in Accounts payable = $ 18.7
5) Cash flow to stockholders = Proceeds from new stock Issue - Repurchase of stock - Dividend paid = 61-30-103 = -72
