Given Information :
Net Income = 35000
Depreciation Expense = 20000
Increase in accounts payable = 2000
Increase in accounts receivable = 3000
Required :
Net cash flow from operating activities = ?
Solution :
To figure out the cash flow from operating activities , we make few adjustments to net income .
<em>Net Income </em>
<em>+ non cash expenses </em>
<em>+ decrease in current assets </em>
<em>- Increase in current assets </em>
<em>+Increase in current liabilities </em>
<em>- decrease in current liabilities </em>
<em>= Net cash flow from operating activities</em>
<em>Following the format above : </em>
<em>Net Income 35000</em>
<em>+ depreciation ( non cash exp) 20000</em>
<em>+increase in accounts payable (current liability) 2000</em>
- Increase in accounts receivable ( current asset) (3000)
=Net cash flow from operating activities 54000
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