Question

Squat XFit Inc. reported the following activities and select balance sheet items ($ in millions). You may also view this data in Excel with the SquatFix Activities and Balance Sheet file. Select results during the year ending December 31, 2020 Revenue 453.2 Interest expense 12.5 Depreciation expense 43.2
Stock-based compensation 12.5 Tax rate 40% Net income 134.5 Balances as of: 12/31/2019 12/31/2020 Accounts payable 120.5 130.5 Accounts receivable 74.8 82.4 Common Stock & APIC 146.4 163.5
Deferred revenue 453.0 532.0
Inventory 132.6 143.2
Current portion of debt 214.0 275.0
Net PP&E 212.7 246.0
Pre-paid expenses 50.0 35.0
Treasury stock (112.3) (123.2)
Accrued wages 67.8 72.5
Other comprehensive income 12.1 13.5
Calculate cash flow from operations for the year ending 12/31/2020:
a. $204.7 million
b. $250.7 million
c. $271.3 million
d. $280.7 million

Answer 1

Answer:

b. $250.7 million

Explanation:

Cash flow from operations is obtained from Cash flow from Operating Activity Section when the Indirect Method is used to prepare that section as follows :

Cash flow from Operating Activity

Net income before taxation                           134.50

Adjustment for Non- Cash Items :

Depreciation expense                                     43.20

Adjustment for Working Capital Items :

Increase in Accounts payable                         10.00

Increase in Accounts receivable                     (7.60)

Increase in Inventory                                      (10.60)

Increase in Current portion of debt                61.00

Decrease in Pre-paid expenses                     15.00

Increase in Accrued wages                             4.70

Cash Generated from Operations                250.20