What was the addition to net working capital

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Reference no: EM131872514

Gorman Distributors shows the following information on its 2014 income statement:

sales = $300,000;

costs = $200,000;

other expenses = $40,000;

depreciation expense = $30,000;

interest expense = $2,000;

taxes = $20,000;

dividends = $10,000.

In addition, you're told that:

-the firm issued $4,500 in new equity during 2014,

-redeemed $6,500 in outstanding long-term debt.

If net fixed assets increased by $7,000 during the year, what was the addition to net working capital?

OCF = EBIT + Depr - Tax

NCS = Change in Net fixed asset + Depr

CFCR = Interest - (Net new borrowing) = ??

CFSH = = Dividend - (Net new equity) = ??

From Cash flow identity:

CFFA = OCF - NCS - Change in NWC = CFCR + CFSH

Change in NWC =

Reference no: EM131872514

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