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17. Curly, Larry & Moe Company had net income of $130,000 for the current year. The...

17. Curly, Larry & Moe Company had net income of $130,000 for the current year. The income statement reveals depreciation expenses of $8,000; a loss of $12,000 and gains of $6,000. Comparative balance sheets reveals that certain CA increased $10,000 and other CA accounts decreased $14,000; some of the CL went up $14,000 and others went down $21,000. Determine the net cash flows from operating activities using the indirect method.

   a. $201,000

   b. $155,000

   c. $141,000

   d. None of the above.

18. Assume you are analyzing two companies in the same industry and you want to know which company uses its assets more effectively to generate revenues. You should use which ratio:

   a. Net Income ratio        c. Debt to Asset ratio

   b. Current ratio           d. Capital Turnover ratio

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Answer #1

17) Net cash flow from operating activities :

Net income 130000
Depreciation expense 8000
Loss 12000
Gain -6000
Increase CA -10000
Other CA decrease +14000
Increase CL 14000
Decrease CL -21000
Net cash flow from operating activities 141000

So answer is c) $141000

18) Assume you are analyzing two companies in the same industry and you want to know which company uses its assets more effectively to generate revenues. You should use which ratio:

So answer is d) Capital turnover ratio

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