Case Solutions for Corporate Finance Ross, Westerfield, and Jaffe 9th Edition

25033 Words Jan 4th, 2012 101 Pages
Case Solutions

Corporate Finance

Ross, Westerfield, and Jaffe
9th edition

CHAPTER 2
CASH FLOWS AT WARF COMPUTERS

The operating cash flow for the company is: (NOTE: All numbers are in thousands of dollars)

OCF = EBIT + Depreciation – Current taxes OCF = $1,332 + 159 – 386 OCF = $1,105

To calculate the cash flow from assets, we need to find the capital spending and change in net working capital. The capital spending for the year was:

| |Capital spending | |
| |Ending net fixed assets |$2,280 |
| |– Beginning net fixed assets |1,792 |
| |+ Depreciation
…show more content…
The firm had positive earnings in an accounting sense (NI > 0) and had positive cash flow from operations and a positive cash flow from assets. The firm invested $142 in new net working capital and $647 in new fixed assets. The firm was able to return $241 to its stockholders and $75 to creditors.

2. The financial cash flows present a more accurate picture of the company since it accurately
Open Document