Question

During the past year, a company had cash flow to stockholders, an operating cash flow, and net capital spending of $16,384, $39,622, and $18,480, respectively. The net working capital at the beginning of the year was $6,996 and it was $8,780 at the end of the year. What was the company's cash flow to creditors during the year?

Answer 1

Answer:

$3,674

Explanation:

Cash flow to the creditors can be calculated by taking the difference of Cash Flow from Assets and Cash flow to Stockholders .

Change in Net Working Capital = Ending Working Capital – Beginning Working Capital

Change in Net Working Capital = $8,780 - $6,996

Change in Net Working Capital = $1,084

Cash Flow from Assets = Operating Cash Flow – Net Capital Spending - Change in Working Capital

Cash Flow from Assets = $39,622 - $18,480 - $1,084

Cash Flow from Assets = $20,058

Cash Flow from Creditors = Cash Flow from Assets – Cash flow to Stockholders

Cash Flow from Creditors = $20,058  - $16,384

Cash Flow from Creditors = $3,674