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13 September, 11:26

During the past year, a company had cash flow to creditors, an operating cash flow, and net capital spending of $30,591, $69,573, and $30,460, respectively. The net working capital at the beginning of the year was $12,352 and it was $14,650 at the end of the year. What was the company's cash flow to stockholders during the year

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  1. 13 September, 11:36
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    The company's cash flow to stockholders during the year is $6,224

    Solution:

    To calculate this, we proceed as follows;

    Change in Net Working Capital =

    Ending Working Capital - Beginning Working Capital

    Change in Net Working Capital = $14,650 - $12,352 = $2,298

    Cash Flow from Assets =

    Operating Cash Flow - Net Capital Spending - Change in Working Capital

    Cash Flow from Assets = $69,573 - $30,460 - $2,298 = $36,815

    Cash Flow to stockholders =

    Cash Flow from Assets - Cash flow to Creditors

    = $36,815 - $30,591 = $6,224
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