Chapter 2, Problem 23QP

Summary Introduction

To determine: The cash flow from assets, cash flow to creditors and cash flow to stock holders.

Introduction:

The cash flow to creditors refers to the net payment received by the creditors of a company. It refers to the interest paid to the creditors minus the net fresh debt borrowed by a company. The cash flow to creditors will be negative, if the net borrowing is higher than the interest paid.

The cash flow to stockholders refers to the dividend paid to the shareholders of a company minus the fresh equity raised by a company. In other words, it refers to the net payment received by the shareholders of a company.

Cash flow from assets refers to the cash flows generated from a firm’s assets. Cash flow from assets also known as cash from the firm.