Right Way Movers has interest expense of $168,total revenues of $38,411,costs of $28,515,depreciation of $306,and taxes of $1,979.The beginning balance sheet has total assets of $48,354,net fixed assets of $31,202,current liabilities of $14,207,and total liabilities of $29,407.The ending balance sheet shows total assets of $49,305,net fixed assets of $33,406,current liabilities of $17,318,and total liabilities of $30,404.What is the annual cash flow of the firm?
A)$9,771
B)−$2,160
C)$15,168
D)$8,474
E)$2,857

Question

Quizplus · Accepted Answer

Annual cash flow = EBIT + Depreciation - Taxes - Increase in Net Working Capital - Capital Expenditures
EBIT = Total Revenues - Costs - Interest Expense
Increase in Net Working Capital = Current Liabilities(end) - Current Liabilities(beginning) = 17,318 - 14,207 = 3,111
Capital Expenditures = Net Fixed Assets(end) - Net Fixed Assets(beginning) + Depreciation = 33,406 - 31,202 + 306 = 2,510
Plugging in the values:
Annual cash flow = (38,411 - 28,515 - 168) + 306 - 1,979 - 3,111 - 2,510 = $9,771
Therefore, the answer is A.

Right Way Movers Has Interest Expense of $168,total Revenues of $38,411,costs