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21 June, 17:29

During the past year, a company had cash flow to stockholders, an operating cash flow, and net capital spending of $16,497, $40,016, and $18,820, respectively. The net working capital at the beginning of the year was $7,083 and it was $8,930 at the end of the year. What was the company's cash flow to creditors during the year?

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  1. 21 June, 17:34
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    The correct answer would be $2,852.

    Explanation:

    The equation here to understand is:

    Ending net working capital = Opening net working capital - Cash flow to Stockholders + operating cash flow - net capital spending - cash flow to creditors.

    $8,930 = $7,083 - $16,497 + $40,016 - $18,820 - X.

    X = 2,852.

    For calculating ending working capital we need to keep in mind that all cash inflows are added in opening working capital and all cash outflows are subtracted.
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