Net capital spending = NFAend NFAbeg + Depreciation – = $59,700 55,977 + 1,910 = $5,633 – Cash flow from assets = OCF Change in NWC Net capital spending – – = $6,371.56 2,819 5,633 = – – –$2,080.44 Cash flow to creditors = Interest Net new LTD – Net new LTD = LTDend LTDbeg – Cash flow to creditors = $1,019 ($27,099 22,352) = – – –$3,728 Net new equity = Common stockend Common stockbeg – Common stock + Retained earnings = Total owners’ equity Net new equity = (OE RE) end (OE RE) beg – – – = OEend OEbeg + REbeg REend – – REend = REbeg + Additions to RE15 Net new equity = OEend OEbeg + REbeg (REbeg + Additions to RE15) – – = OEend OEbeg Additions to RE – – Net new equity = $60,532 58,737 1,662.56 = $132.44 – – CFS = Dividends Net new equity – CFS = $1,780 132.44 = $1,647.56 – As a check, cash flow from assets is –$2,080.44. CFA = Cash flow from creditors + Cash flow to stockholders CFA = + 1,647.56 = –$3,278 –$2,080.44
Net capital spending = NFAend – NFAbeg + Depreciation = $59,700 – 55,977 + 1,910 = $5,633 Cash flow from assets = OCF – Change in NWC – Net capital spending = $6,371.56 – 2,819 – 5,633 = –$2,080.44 Cash flow to creditors = Interest – Net new LTD Net new LTD = LTDend – LTDbeg Cash flow to creditors = $1,019 – ($27,099 – 22,352) = –$3,728 Net new equity = Common stockend – Common stockbeg Common stock + Retained earnings = Total owners’ equity Net new equity = (OE – RE) end – (OE – RE) beg = OEend – OEbeg + REbeg – REend REend = REbeg + Additions to RE15 Net new equity = OEend – OEbeg + REbeg – (REbeg + Additions to RE15) = OEend – OEbeg – Additions to RE Net new equity = $60,532 – 58,737 – 1,662.56 = $132.44 CFS = Dividends – Net new equity CFS = $1,780 – 132.44 = $1,647.56 As a check, cash flow from assets is –$2,080.44. CFA = Cash flow from creditors + Cash flow to stockholders CFA = –$3,278 + 1,647.56 = –$2,080.44
solution-manual-fundamentals-of-corporate-finance-11th-edition-ross.docx