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Financial Analysis Questions Balance Sheet Health Valley Company Years ending December 31, 2001 and 2002 2001...

Financial Analysis Questions Balance Sheet Health Valley Company Years ending December 31, 2001 and 2002 2001 2002 Cash $ 20,000 $ 12,000 Accounts receivable 40,000 48,000 Inventory 60,000 50,000 Total current assets $120,000 $110,000 Gross fixed assets $400,000 $450,000 (Accumulated depreciation) (120,000) (150,000) Net fixed assets $280,000 $300,000 Total assets $400,000 $410,000 Notes payable 5,000 10,000 Accounts payable to suppliers 25,000 30,000 Accruals 10,000 5,000 Total current liabilities 40,000 45,000 Long-term debt 100,000 140,000 Common stock ($2.00 par value) 60,000 45,000 Capital surplus 50,000 30,000 Retained earnings 150,000 150,000 Total Liabilities and Equity $400,000 $410,000 Health Valley Company Income Statement Data: 2001 Net income = $15,000 2002 Net income = $18,000 2. Compute 2002 Net Cash Flow from Operating Activities for Health Valley Company

. a. $20,000 b. $46,000 c. $40,000 d. $50,000 e. $55,000

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Answer #1

Health Valley Company

Statement of Cash Flows – Operating Activities Section (Indirect Method)

For the year ended 2002

Operating Activities

Net Income

$18,000

Adjustments to reconcile net income to net cash provided by operating activities

Add: Depreciation Expenses

$30,000

Less: Increase in Accounts Receivables

-$8,000

Add: Decrease in Inventories

$10,000

Add: Increase in Notes Payable

$5,000

Add: Increase in Accounts Payable

$5,000

Less: Decrease in Accruals

-$5,000

$37,000

Net cash provided by operating activities

$55,000

“Hence, the Net Cash Flow from Operating Activities for Health Valley Company will be (e). $55,000”

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