Answer:
Cash flow from Operating Activities using indirect method start with;
Net income $63,000
Add back depreciation $24,000
Add/lesss profit/loss from sale of assets $0,000
Changes in Working Capital
Increase or decrease trade receivable $ 0,000
increase or decrease in inventory $ 0,000
Increase or decrease in treade payable <u>$ 0,000 </u> $ 0,000
Net cash flow from operating activities $87,000
Explanation:
Cash flows can be prepared in two ways; using direct method or indirect method.
irrespective of the method adopted, the major component of the cash flow statment that changes is the operating activities. under the indirect method, the operating activities starts with the net income. since the net income usually net of none-cash movement items like; depreciation, amortisation and impairment, these will be added back to the net income. Also investment activities items like; income from investment or profit from disposal of none-current assets are deducted. Further, movements in working capital (Inventory, trade receivables and trade payable) are net off and the resultant value is used to adjusted the net income too. This gives the net income from operating activities.
