For each of the following three transactions by a firm, calculate the effect on each of...

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Finance

For each of the following three transactions by a firm,calculate the effect on each of the following items: “Operating”Cash Flow, ?Net Working Capital, Net Capital Spending, Cash Flowfrom Assets, Cash Flow to Creditors, and Cash Flow to Shareholders.If an item is completely unaffected by the transaction, you shouldnot mention the item; however, if an item is affected in multipleways that have a net effect of $0, you must report the $0. (1) Thefirm issues $2.3 million of new debt in exchange for cash. (2) Thefirm depreciates its long-term assets by $5 million. (3) The firmuses cash to pay off $77,000 of accounts payable.

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A ISSUE OF 23 MILLION DEBT IN EXCHANGE FOR CASH Effect on Change Reason Operating cash flow No Since raising money by way of debt is a financing activity operating cashflows are not affected Change in Net working capital No No effect on Net working capital Net capital spending No It is the amount spent on acquiring Fixed assets during the year Raising debt doesnot Impact Net capital spending Cash flow from See Answer

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