Name: Kenisha Manicksingh; Student ID: 2022071

Chapter 2 Review Solutions

1. CFFA = OCF – NCS – Addition to NWC

= 200 – 400 - 150 = -350

2. NWC = CA – CL
FA + CA = CL + LTD + E
CA – CL = LTD + E – FA
= 200 (50% of 400) + 600 – 500 = 300

3. NCS = Ending FA – Beginning FA + Depreciation

= 1,413 – 1,680 + 210 = -57

4. FA = 1,700 (Book value)

NWC = CA-CL = 300
LTD = 700
FA + CA = CL + LTD + E
FA + (CA-CL) – LTD = E
E = 1,700 + 300 – 700 = 1,300

5. NI = 750 M
Addition to retained earnings = 600 M
Dividend paid = 750 – 600 = 150 M
Dividend per share = 150 / 100 = $1.5

6. NCS = Ending FA – Beginning FA + Depreciation

= 6,000 – 4,000 + 400 = 2,400

7. CF to shareholders = Dividend paid – Net new equity raised

= 150 – 100 = 50

8. CF to creditors = Interest paid – Net new borrowings

= 20 – (210-180) = -10 M

9.

10. CFFA = OCF – NCS – Addition to NWC

OCF = EBIT + Depreciation – Taxes
= 691 + 276 – 187 = 780
NCS = 2,880 – 2,731 + 276 = 425
Addition to NWC = (708 -540) – (642 - 543) = 69
CFFA = 286
CF to shareholders = Dividend paid – Net new equity raised
= 121 – 50 = 71
CF to creditors = Interest paid – Net new borrowings
= 141 – (-74) = 215