The Plaza Cafe has an operating cash flow of $83,770,depreciation expense of $43,514,and taxes paid of $21,590.A partial listing of its balance sheet accounts is as follows: $$\begin{array} { | l | r | r | }
\hline & \begin{array} { l }
\text { Beginning } \
\text { Balance }
\end{array} & \begin{array} { l }
\text { Ending } \
\text { Balance }
\end{array} \
\hline \text { Current assets } & \$ 138,590 & \$ 129,204 \
\hline \text { Net fixed assets } & 599,608 & 597,913 \
\hline \text { Current liabilities } & 143,215 & 139,827 \
\hline \text { Long-tem debt } & 408,660 & 402,120 \
\hline
\end{array}$$ What is the amount of the cash flow from assets?

Question

The Plaza Cafe has an operating cash flow of $83,770,depreciation expense of $43,514,and taxes paid of $21,590.A partial listing of its balance sheet accounts is as follows: $$\begin{array} { | l | r | r | } 
\hline & \begin{array} { l } 
\text { Beginning } \
\text { Balance }
\end{array} & \begin{array} { l } 
\text { Ending } \
\text { Balance }
\end{array} \
\hline \text { Current assets } & \$ 138,590 & \$ 129,204 \
\hline \text { Net fixed assets } & 599,608 & 597,913 \
\hline \text { Current liabilities } & 143,215 & 139,827 \
\hline \text { Long-tem debt } & 408,660 & 402,120 \
\hline
\end{array}$$ What is the amount of the cash flow from assets?

Quizplus · Accepted Answer

The cash flow from assets is calculated as operating cash flow minus the net capital spending and changes in net working capital. Net capital spending is the change in net fixed assets plus depreciation: ($597,913 - $599,608) + $43,514 = $41,819. The change in net working capital is the change in current assets minus the change in current liabilities: ($129,204 - $138,590) - ($139,827 - $143,215) = -$4,094. Therefore, cash flow from assets = $83,770 - $41,819 - (-$4,094) = $47,949.

The Plaza Cafe Has an Operating Cash Flow of $83,770,depreciation