Question

The Stancil Corporation provided the following current information: Proceeds from long-term borrowing $ 18,500 Proceeds from the sale of common stock 5,500 Purchases of fixed assets 22,500 Purchases of inventories 3,400 Payment of dividends 16,000 Determine the cash flows from the firm and the cash flows to investors of the firm.

Answer 1

Answer:

The cash flows from the firm and the cash flows to investors of the firm is -$25,900 and -$8,000 respectively

Explanation:

The computation is shown below:

Cash flows from the firm = Fixed asset purchased amount + inventory purchased amount

= -$22,500 + -$3,400

= -$25,900

And, the cash flows to investors of the firm is

= Long-term borrowing + common stock sale value + dividend payment made

= -$18,500 + -$5,500 + $16,000

= -$8,000

Answer 2

The net balance of cash coming into and out of a firm at a certain point in time is referred to as cash flow. It's possible to have a negative or positive cash flow.

The firm's cash flows from operations and cash flows to investors are -$25,900 and -$8,000, respectively.

The Computation of the cashflows from and to the firm and investors respectively:

$\text{Cash flows from the firm = Fixed asset purchased amount + inventory purchased amount}\\\\ = -22,500 + (-3,400)\\\\ = -25,900\\\\\\ \text{Computation of the cash flow to investors of the firm is=}\\\\ \text{Long-term borrowing + common stock sale value + dividend payment made}\\\\ = (-18,500) + (-5,500) + 16,000\\\\ = -8,000$

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