Question

HiWay Furniture has sales of $316,000, depreciation of $47,200, interest expense of $41,400, costs of $148,200, and taxes of $16,632. The firm has net capital spending of $36,400 and a decrease in net working capital of $14,300. What is the cash flow from assets for the year?

Answer 1

Answer:

Net cash flow from Assets           129,068

Explanation:

Income Statement                              $

Sales                                              316,000

Cost                                              ( 148,200 )

Profit before Interest & Tax         167,800

Tax                                                 (16,632)

Profit after Tax                             151,168  

Cash flow :

Profit After Tax                              151,168

Net capital spending                    (36,400)

Decrease in Net working capital  14,300  

Net cash flow from Assets           129,068

Assumptions under cash flow computation :

-Depreciation is a non-cash item. It is just an accounting provision

-Interest expense is assumed to be unpaid yet