Question

Calculate cash flows from operations –indirect method. Net income was $67,100; accounts receivable decreased by $19,500; inventory increased by $10,800; proceeds from the issuance of long-term debt were $22,500; accounts payable decreased by $6,200; equipment purchases were $75,000; depreciation and amortization expense was $36,000. Calculate the net cash provided (used) by operating activities for the period.

Answer 1

105,600

Step-by-step explanation:

Cashflow from operations (CFO) is calculated as below:

CFO = NI + NCC - WCInv, where:

NI: Net income;

NCC: Non-cash charges, which is depreciation in this case;

WC: Working capital investment, which is calculated as Changes in inventories + Changes in receivables - Changes in payables.

CFO = 67,100 + 36,000 - [10,800 + (-19,500) - (-6,200)] = 105,600