Question

Category Prior Year Current Year Accounts payable 3,188.00 5,914.00 Accounts receivable 6,929.00 9,043.00 Accruals 5,741.00 6,056.00 Additional paid in capital 19,713.00 13,436.00 Cash ??? ??? Common Stock 2,850 2,850 COGS 22,988.00 18,072.00 Current portion long-term debt 500 500 Depreciation expense 1,035.00 1,036.00 Interest expense 1,299.00 1,161.00 Inventories 3,010.00 6,713.00 Long-term debt 16,845.00 22,793.00 Net fixed assets 75,198.00 73,823.00 Notes payable 4,000.00 6,569.00 Operating expenses (excl. depr.) 19,950 20,000 Retained earnings 35,469.00 34,419.00 Sales 46,360 45,033.00 Taxes 350 920 What is the firm's cash flow from operations?

Answer 1

SOLUTION:

To calculate cash flow from operations, Net income has to be calculated first.

Calculation of Net Income:

PARTICULARS	AMOUNT
Sales	45,033
less: COGS	(18,072)
Add: Inventory	6,713
less: Depreciation	(1,036)
less: Interest	(1,161)
less: Operating Exps.	(20,000)
less: Taxes	(920)
NET INCOME	10,557

STATEMENT OF CASH FLOW FROM OPERATIONS:

PARTICULARS	AMOUNT
Net Income	10,557
Add: Depriciation	1,036
Accounts Payable Increase	2,726
Accruals Increase	315
Notes Payable Increase	2,569
Less: Accounts Receivable Increase	(2,114)
Inventory Increase	(3,703)
NET CASH FLOW FROM OPERATIONS	11,386