Extra Problem on the Cash Flow Identity and the Statement of Cash Flows 
 
 
 
Balance Sheet
Willy Wonka Inc.
Assets
1998
1997
Liabilities and Equity
1998
1997
Cash
$10
$80
Accounts Payable
$60
$30
Accounts Receivable
375
315
Notes Payable
110
60
Inventories
615
415
Accruals
140
130
Total Current Assets
$1,000
$810
Total Current Liabilities
$310
$220
Net Plant and Equipment
1,000
870
Long-term Bonds
754
580
 
 
 
Total Debt
$1,064
$800
 
Preferred Stock
40
40
 
 
 
Common Stock
130
130
 
 
 
Retained Earnings
766
710
 
 
 
Total Common Equity
$896
$840
Total Assets
$2,000
$1,680
Total Liabilities & Equity
$2,000
$1,680
 
 
Income Statement: Willy Wonka Inc.
 
1998
1997
Net Sales
$3,000.0
$2,850.0 
Costs excluding Depreciation
2,616.2
 2,497.0
Depreciation
100.0
 90.0
Total Operating Costs
$2,716.2
 $2,587.0
EBIT
$283.8
 $263.0
Interest
88.0
 60.0
EBT
$195.8
 $203.0
Tax
78.3
 81.0
Net Income before Preferred Dividends
$117.5
 $122.0
Preferred Dividends
4.0
4.0
Net Income (availabe to common stockholders)
$113.5
 $118.0
 
 
Questions for the year 1998:

Part A: The Cash Flow Identity

(1)     Calculate the Operating Cash Flow
(2)     Calculate the Capital Spending
(3)     Calculate the Additions to Net Working Capital
(4)     Calulate the Cash Flow from Assets
(5)     Calculate the Dividends to Common Stockholders
(6)     Did Willy Wonka Inc. issue common equity during the year? If so, how much?
(7)     Did Willy Wonka Inc. issue long-term debt during the year? If so, how much?
(8)     What is the Cash Flow to Creditors?
(9)     What is the Cash Flow to Stockholders?
(10)    Show that the Cash Flow Identity works.

Part B: The Statement of Cash Flows

(11)    What should the final number of the Statement of Cash Flows be equal to?
(12)    Define whether a source of cash is a cash inflow or an outflow for the firm
(13)    Summarize the cash inflows and outflows for Willy Wonka Inc. that fall under Operating Activities
(14)    Summarize the cash inflows and outflows for Willy Wonka Inc. that fall under Investment Activities
(15)    Summarize the cash inflows and outflows for Willy Wonka Inc. that fall under Financing Activities
(16)    Using your answers in (13)-(15) finish the Statement of Cash Flows.
(17)    From the Balance sheet you can see that Inventories changed in 1998. Indicate if this change is a Source or a Use of cash.
(18)    From the Balance sheet you can see that Accounts Payable changed in 1998. Indicate if this change is a Source or a Use of cash.
(19)    From the Balance sheet you can see that Accounts Receivable changed in 1998. Indicate if this change is a Source or a Use of cash.


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