Calculate ending fixed assets given the following information: cash flow from assets ($7,240); EBIT = $1,000; depreciation = $100; taxes = $240; change in net working capital = ($2,000); beginning fixed assets = $30,000

Question

Quizplus · Accepted Answer

The ending fixed assets can be calculated by adding the net capital spending to the beginning fixed assets. Net capital spending is found by adding depreciation to the cash flow from assets and then subtracting the change in net working capital. So, net capital spending = $7,240 (cash flow from assets) + $100 (depreciation) - (-$2,000) (change in net working capital) = $9,340. Therefore, ending fixed assets = beginning fixed assets + net capital spending = $30,000 + $9,340 = $39,340, which rounds to $40,000.

Calculate Ending Fixed Assets Given the Following Information: Cash Flow