1. Questions-Financial Statements

2. Q1)
Barrett, Inc., has sales of $47,500, costs of $20,500, depreciation expense of $1,800, and interest expense of $1,300.
If the tax rate is 35 percent, what is the operating cash flow, or OCF?

3. OCF = EBIT + Depreciation – Taxes

4. Q2)
Gordon Driving School’s 2014 balance sheet showed net fixed assets of $3.2 million, and the 2015 balance sheet showed net fixed assets of $3.8 million. The company’s 2015 income statement showed a depreciation expense of $235,000.
What was the company's net capital spending for 2015?

5. Net capital spending = NFAend – NFAbeg + Depreciation

6. Q3)
Ritter Corporation’s accountants prepared the following financial statements for year-end 2015.
OFCF?
FCF?

7. OFCF=EBIT-Tax+Depreciation-CAPEX-ΔWC
EBIT: NI-COGS-SG&A-Depreciation: =139
Tax: 0
CAPEX=ΔLT Assets: = =121
(Since everything is NET… In other words, Depreciation is taking care of, I have to add back depreciation)
ΔWC=WC(2015)-WC(2014)=( )-( )= =16
= =103
FCF=NI+Depreciation-CAPEX+ΔLT Debt-ΔWC
ΔLT Debt=LT Debt(2015)-LT Debt (2014)= =16
= =119

8. Q4)
OFCF?
FCF?

9. OFCF=EBIT-Tax+Depreciation-CAPEX-ΔWC
CAPEX=ΔLT Assets: = =337
(Since everything is NET… In other words, Depreciation is taking care of, I have to add back depreciation)
ΔWC=WC(2015)-WC(2014)=( )-( )= =99
= =347
FCF=NI+Depreciation-CAPEX+ΔLT Debt-ΔWC
ΔLT Debt=LT Debt(2015)-LT Debt (2014)= =-50
= (-50)-99=127