Question

Find the Net Cash Flow of Operating activities?Engineering Wonders reports net income of $53 million. Included in that number is building depreciation expense of $4.1 million and a gain on the sale of land of $1.9 million. Records reveal decreases in accounts receivable, accounts payable, and inventory of $2.5 million, $2.7 million, and $3.3 million, respectively.

Answer 1

Answer:

Total cash flow from operations        $58.3 million

Explanation:

We can calculate the net cash flow effect from operating activities by making the following adjustments.

Net Income                                        53 m

Add: depreciation                              4.1 m

Less: Gain on asset disposal             (1.9 )m

Add: Reduction in receivables          2.5 m

Less: Reduction in payable               (2.7)m

Add: Reduction in inventory              3.3 m

Total cash flow from operations        $58.3 million

Gain on asset is part of the investing activities cash flow.

Hope that helps.