Question

Use the income statement and the list of changes to answer the question.

Stuart Company Income Statement January 1 to December 31, 2019 (amounts in thousands)
Revenue	8,800
Cost of Goods Sold (COGS)	2,640
Gross Income	6,160
Sales, General, & Administrative Expenses (SG&A)	880
Depreciation Expense	900
Other Expenses	500
Earnings Before Interest & Taxes (EBIT)	3,880
Interest	110
Pre-Tax Income	3,770
Income Taxes	1,508
Net Income	2,262

Between January 1 and December 31, 2019:

1. Accounts Receivable decrease by $300,000
2. Accounts Payable decrease by $900,000
3. Gross Property, Plant, & Equipment increase by $7,500,000
4. Long Term Debt decreases by $600,000

Assume no other changes

What is the Net Cash Flow?

Note: Account change amounts are provided in dollars but the financial statement units are thousands of dollars.

Please specify your answer in the same units as the financial statements (i.e., enter the number from your completed statement of cash flows).

Answer 1

Solution:

Particulars	Details	Amount
Cash Flow from Operating Activities:
Net Income		$2,262
Adjustments to reconcile net income to cash flow from operating activities:
Depreciation	$900
Accounts receivable decrease	$300
Accounts payable decrease	-$900
		$300
Net Cash Flow From Operating Activites (A)		$2,562
Cash Flow from Investing Activities:
Property, Plant, & Equipment increase (Purchase)	-$7,500
Net Cash Flow From Investing Activites (B)		-$7,500
Cash Flow from Financing Activities:
Payment of Long term debt	-$600
Net Cash Flow From Financing Activites (C)		-$600
Net Cash Flow (A + B+ C)		-$5,538

Hence net cash flow = - $5,538

Outflow is there.