Consider the information below from a firm's balance sheet for ...

[jeatrice]

Consider the information below from a firm's balance sheet for 2013 and 2014.
 
  Current Assets 2014 2013 Change
  Cash and Equivalents 1,561 1,800 - 239
  Short-Term Investments 1,052 3,010 -1,958
  Accounts Receivable 3,616 3,129  487
  Inventories 1,816 1,543  273
  Other Current Assets  707  601  106
  Total Current Assets 8,752 10,083 -1,331
  Current Liabilities
  Accounts Payable 5,173 5,111  62
  Short-Term Debt  288  277  11
  Other Current Liabilities 1,401 1,098 303
  Total Current Liabilities 6,862 6,486  376
 
  What is the Net Working Capital for 2014? What is it for 2013? What is the Change in Net Working Capital (NWC)? Assuming the Operating Cash Flows (OCF) are 7,155 and the Net Capital Spending (NCS) is 2,372, what is the Cash Flow from Assets?
  What will be an ideal response?

Question 2

Cash flow from assets shows the success or failure of the operating decisions, while cash flow to creditors examines a portion of how the firm is financing the operations.
 
  Indicate whether the statement is true or false.

[sierramartinez]

Answer to Question 1

Answer:
Net Working Capital for 2014 is 8,752 - 6,862 = 1,890
Net Working Capital for 2013 is 10,083 - 6,486 = 3,597
Decrease in Net Working Capital (NWC) = 1,890 - 3,597= -1,707
Assuming that Operating Cash Flows (OCF) are 7,155, Net Capital Spending (NCS) is 2,372, and Decrease in Net Working Capital is -1,707, we get:
Cash Flow from Assets = OCF - NCS  Decrease in NWC = 7,155 - 2,372 - (-1,707) = 6,490.

Answer to Question 2

Answer: TRUE