Question

A company had net income of $209600. Depreciation expense is $26900. During the year, Accounts Receivable and Inventory increased $17000 and $42100, respectively. Prepaid Expenses and Accounts Payable decreased $5400 and $6300, respectively. There was also a loss on the sale of equipment of $1900. Using the indirect method, how much cash was provided by operating activities

Answer 1

$309200 cash was provided by operating activities.

Step 1: Net Income is $209600

Step 2: losses = $1900

Step 3: depreciation (non-cash item) of $26900

Step 4: Add or subtract changes to operating accounts

Cash outflow (Accounts Receivable) = $17000

Cash inflow (Inventory) = $42100

Cash inflow (Accounts Payables) = $6300

Cash inflow Prepaid expenses) = $5400

Total changes in Operating accounts = 17000 + 42100 + 6300 + 5400 = $70800

Cash Flow From Operations formula (Indirect Method) = $209600 + $1900 + $26900 + $70800 = $309200

What is cash flow?

The net balance of money coming into and going out of a business at a particular period is referred to as cash flow. A firm constantly receives and expends cash.

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