Suppose that a firm paid dividends of $300 and interest of $611. In addition, the firm raised cash by selling new debt of $400 and new equity of $911. What is the firm's cash flow to creditors?

Question

Quizplus · Accepted Answer

The cash flow to creditors is calculated as interest paid minus net new borrowing. Here, interest paid is $611 and net new borrowing is $400. So, cash flow to creditors = $611 - $400 = $211.

Suppose That a Firm Paid Dividends of $300 and Interest