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What is owners’ equity for 2015 and 2016? b. What is the change in net working capital for 2016? c. In 2016, Cabo Wabo purchased $7,160 in new fixed assets. How much in fixed assets did the company sell? What is the cash flow from assets for the year? (The tax rate is 40 percent.) d. During 2016, Cabo Wabo raised $2,155 in new long-term debt. How much long-term debt must the company have paid off during the year? What is the cash flow to creditors?

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Answer:

The concluding part of this question is below:

Partial Balance Sheets as of December 31, 2015 and 2016

Current Assets 2015: $2,718 2016: $2,881 Current Liabilites 2015: $1,174 2016: $1,726

Net Fixed Assets 2015: $12,602 2016: $13,175 Long Term Debt 2015: $6,873 2016: $8,019

2016 Income Statement

Sales $40,664

Costs $20,393

Depreciation $3,434

Interest paid $938

a.Owner's is the balancing figure using the equation Assets=Capital+Liabilities

Which are $7273 and $6311 respectively

b.Change in net working capital=Ending NWC-Opening NWC

                                                      =($2881-$1726)-($2718-$1174)

                                                       =$-389

C.fixed asset sold==$12602+$7160-$3434-$13175=$3153

(beginning Net Fixed Asset+purchases-depreciation-ending Net Fixed asset)

Cash flow from assets for 2016: = Cash flow from operations - Capital spending - Change in NWC

Cash flow from operations = EBIT + depreciation-taxes = $16837+$3434-$6360 = $13912

Capital spending = Ending Fixed assets -Beginning Fixed assets + depreciation = $13175-$12602+$3434 = $4007

Change in NWC = - 389 (calculated under  above)

Therefore, cash flow from assets = $13912-$4007-(-)$

389 = $10,294

Total debt paid during the year = Opening debt - closing debt + new debt

=$6873-$8019+$2155 = $1009

Cash flow to creditors = Opening debt - closing debt + interest expense= $6873-$8019+$938 = -$208

Explanation:

BALANCE SHEETS 2015 2016 INCOME STATEMENT FOR 2016  

Current assets 2718 2881              Sales           40664  

Net fixed assets 12602 13175              Costs      20393  

                               15320  16056                  Depreciation 3434  

Current liabilities 1174 1726                  EBIT        16837  

LT debt 6873 8019                                Interest        938  

Owners' equity 7273 6311                   EBT     15899  

           (15320-1174-6873)(16056-1726-8019) Tax at 40% 6360

                              5320 16056             Net Income 9539

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