Question

Fidelity Systems reports net income of $81 million. Included in that number is depreciation expense of $9 million, and a gain on the sale of equipment of $2 million. Records reveal increases in Accounts Receivable, Inventory, and Accounts Payable of $3 million, $3 million, and $3 million, respectively. Calculate Fidelity's net cash flows from operating activities using the indirect method. (Negative value should be indicated by minus sign. Enter your answer in millions.)

Answer 1

Answer:

$85 million

Explanation:

As per the given question the solution of net cash flows from operating activities using the indirect method is provided below:-

Net cash flow from operating activities = Net income + Depreciation - Gain on sale of equipment - Increase in accounts receivable - Increase in inventory + Increase in accounts payable

= $81 million + $9 million - $2 million - $3 million - $3 million + $3 million

= $93 million - $8 million

= $85 million

So, we have calculated the net cash flow from operating activities by using the above formula.