Question

Company LAX reported 115,000 of net income, a decrease of $40,000 of accounts receivable, a payment of interest of $20,000, an increase of $21,000 of accounts payable, an increase of $10,000 of prepaid assets and bought equipment for $4000. What is their net inflow of cash from operating activities?

Answer 1

$125,000

Step-by-step explanation:

Given

net income = $115,000

Decrease in accounts receivable = $40,000

Payment of interest = $20,000

Increase in prepaid assets = $10,000

Bought equipment = $4000

Net inflow of cash from operating activities = $115,000 + $40,000 - $20,000 - $10,000

= $125,000

The purchase of equipment is a part of financing activities and as such is not considered in the computation of the net inflow of cash from operating activities.