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15 September, 09:28

Hurricane Industries had a net income of $129,650 and paid 40 percent of this amount to shareholders in dividends. During the year, the company sold $80,250 in new common stock. What was the company's cash flow to stockholders?

a. 28390

b. 49400

c. - 28390

d. 51860

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Answers (2)
  1. 15 September, 09:38
    0
    a. 28390

    Explanation:

    Stockholders cash flow is the net of cash inflows from stockholders and cash outflows to stockholders.

    Net Income = $129,650

    Payout Ratio = 40%

    Cash outflow

    Amount of Dividend Paid = $129,650 x 40% = $51,860

    Cash Inflow

    Common stock issue = $80,250

    Net Stockholder's cash flow = $80,250 - $51,860

    Net Stockholder's cash flow = $28,390
  2. 15 September, 11:37
    0
    C. - 28390

    Explanation:

    The formula for calculating cash flow to share holders is

    CFS = dividends paid - net new equity raised

    dividends = 129650 * 0.4 = 51860

    new common stock = 80250

    CFS = 51860 - 80250 = -28390
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Home » Business » Hurricane Industries had a net income of $129,650 and paid 40 percent of this amount to shareholders in dividends. During the year, the company sold $80,250 in new common stock. What was the company's cash flow to stockholders? a. 28390 b. 49400 c.
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