Question

Following data is extracted from the financial statements of LMG, Inc. for 2018: Purchases of property and equipment $ 7,600 Purchases of marketable securities $ 18,750 Sales of marketable securities $ 9,250 Maturities of marketable securities $ 1,975 Acquisitions of businesses $1200 Deferred revenue $740 Prepaid expenses and other current assets $980 Taxes paid related to net equity share settlement awards $3,835 Principal payments on financing obligations $825 Repurchases of Class A common stock $2,330 Calculate the following for LMG Inc.:

Purchases of property and equipment                                 $ 7,600

Purchases of marketable securities                                     $ 18,750

Sales of marketable securities                                             $ 9,250

Maturities of marketable securities                                    $ 1,975

Acquisitions of businesses                                                   $1200

Deferred revenue                                                                 $740

Prepaid expenses and other current assets                          $980

Taxes paid related to net equity share settlement awards $3,835

Principal payments on financing obligations                    $825

Repurchases of Class A common stock                               $2,330

Calculate the following for LMG Inc.:

a) The net cash flows from investing activities in 2018?

b) The net cash flows from financing activities in 2018?

c) The net change in cash and cash equivalents, if the net cash flow from operating activities in 2018 is $ 15,620?

Answer 1

In order to solve this question, it is important to bifurcate the cash flows into their respective classes.

Please note that the given amount of net cash flow of $15620 to calculate Other net Inflows from operating activity (calculated as 15620-740-980). The same can be seen from the table here:

Ans a) Investing Activity cash flow (A) is $16,325 (Net outflow) for 2018

Ans b) Financing Acivity cash flow (A) is $6,990 (Net outflow) for 2018

Ans c) $7695 cash outflow is the net change in cash flow, if the net cash flow from operating activities in 2018 is $ 15,620

The same is detailed below.