Answer:
(a) Net Cash flow from operating activities = 115,000
(b) Net Cash flow from operating activities (NCOA) to current liabilities (CL) :
Current liabilities = 22000+9000 = 31000
NCOA to CL = 115,000/31000 = 3.71
Explanation:
Income Statement
$
Sales 750,000
Cost of Goods sold <u> (470,000) </u>
Gross profit 280,000
Wages expenses (110,000)
Rent expenses (42,000)
Insurance expenses <u> (15,000)</u>
Net Income <u> 113,000</u>
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Cash flow Statement
Net Income 113,000
Cash flow from operating activities :
Increase in Receivables (54,000-49,000) (5,000)
Decrease in Inventories (66,000-60,000) 6,000
Increase in prepaid Insurance (8000-7000) (1000)
Increase in Accounts Payable (22000-18000) 4000
Decrease in wages payable (11000-9000) <u>(2000)</u>
Net increase in cash flow from Operating activities 115,000
