Answer:
The answer is -$4,940
Explanation:
Net income = Profit before interest and tax minus interest minus taxes
We rewrite the formula to get interest:
Interest = Profit before interest and tax minus taxes minus net income
= $27,130 - $5,450 - $16,220
=$5,460
Cash flow to creditor equals:
Amount repaid to suppliers minus new amount borrowed plus interest
$31,600 - $42,000 + $5,460
-$4,940
Answer:
Amount of cash flow to creditor is $37,060.
Net cash flow from/(to) creditors is $4,940
Explanation:
The amount of cash flow to credit is the net of the cash received from the creditor, interest paid to the creditor and amount paid as debt settlement.
The net income is the difference between the earnings before interest and taxes and the sum of interest and tax expenses. Mathematically,
Net income = Earnings before interest and tax - Interest - taxes
As such,
Interest = Earnings before interest and tax - net income - taxes
Interest = $27,130 - $16,220 - $5,450 = $5,460
Cash flow to creditor = $5,460 + $31,600
= $37,060
Net cash flow from/(to) creditors = $42,000 - $37,060 = $4,940
