# Use the following information for Ingersoll, Inc., (assume the tax rate is 30 percent): |...

## Question:

Use the following information for Ingersoll, Inc., (assume the tax rate is 30 percent):

 2013 2014 Sales $15,573$15,336 Depreciation 1,741 1,816 Cost of goods sold 4,379 4,787 Other expenses 986 864 Interest 835 966 Cash 6,187 6,706 Accounts receivable 8,120 9,667 Long-term debt 20,560 24,836 Net fixed assets 51,064 57,030 Accounts payable 5,762 6,111 Inventory 14,419 15,368 Dividends 1,350 1,698

For 2014, calculate the cash flow from assets, cash flow to creditors, and cash flow to stockholders.

 Cash flow from assets $Cash flow to creditors$ Cash flow to stockholders $## Statement of Cash Flow for Decision Making All stakeholders cannot make meaningful decisions without even taking a look at the company's cash flow statement. Cash flow is very important in the business because without cash or unable to generate cash from operations the company cannot survive even in the short run like payment to suppliers and payment to employees for salaries. ## Answer and Explanation: $562 Cash flow from assets

{eq}Cash~Flow~from~Assets~=~Operating~Cash~Flow~+~Increase(Decrease)in~Working~Capital~+~Increase(Decrease)~in~Fixed~Assets {/eq}

In the cash flow statement, an increase in the current assets and the decrease in the current liabilities shall deduct from the operating cash flow.

{eq}Cash~Flow~from~Assets~=~9,373~-~1,547~-~949~-~349~-~5,966 {/eq}

$4,145 Cash flow to creditors {eq}Cash~flow~from~creditors~=~Interest~paid~-~Net~new~borrowings {/eq} {eq}Cash~flow~from~creditors~=~131~-~4,276 {/eq} $1,581 Cash flow to stockholders

Equity is not given in this case thus we will compute for the equity in both 2013 and 2014.

 Year 2013 2014 Cash 6,187 6,706 Accounts receivable 8,120 9,667 Inventory 14,419 15,368 Net fixed assets 51,064 57,030 Accounts payable (5,762) (6,111) Long-term debt (20,560) (24,836) Common Stock 53,468 57,824 Net Income 7,632 6,903 Dividends (1,350) (1,698) Total Equity 59,750 63,029

{eq}Cash~flow~to~stockholders~=~Dividends~paid~-~Net~new~equity {/eq}

{eq}Cash~flow~to~stockholders~=~1,698~-~3,279 {/eq}