Question

darnell, inc.'s balance sheet indicated that the cash account increased by $5,400 during the past year. the company generated a positive cash flow from operating activities of $14,000 and a negative cash flow from investing activities of $6,100. what was the cash flow effect of the company's financing activities?

Answer 1

The cash flow effect of the company's financing activities is -$2,500.

Step-by-step explanation:

The cash flow effect of a company's financing activities can be determined by analyzing the changes in the cash account on the balance sheet. In this case, the cash account increased by $5,400. The company generated a positive cash flow from operating activities of $14,000 and a negative cash flow from investing activities of $6,100. To determine the cash flow effect of financing activities, we can use the formula:

Cash flow from financing activities = Change in cash - Cash flow from operating activities - Cash flow from investing activities

Using the given information, we can calculate:

Cash flow from financing activities = $5,400 - $14,000 - (-$6,100) = $5,400 - $14,000 + $6,100 = -$2,500

Therefore, the cash flow effect of the company's financing activities is -$2,500.

Answer 2

The cash flow effect of Darnell, Inc.'s financing activities for the past year was -$2,500, which suggests the company may have repaid debts or paid dividends.

Step-by-step explanation:

To determine the cash flow effect of Darnell, Inc.'s financing activities, we have three pieces of information provided from the balance sheet and cash flow statement:

• The cash account increased by $5,400 during the year.
• The company generated a positive cash flow from operating activities of $14,000.
• The company had a negative cash flow from investing activities of -$6,100.

Calculating the cash flow from financing activities involves taking the change in cash and subtracting both operating and investing cash flows. Using the provided information:

Change in cash = Cash flow from operating activities + Cash flow from investing activities + Cash flow from financing activities

Therefore:

$5,400 = $14,000 + (-$6,100) + Cash flow from financing activities

Cash flow from financing activities = $5,400 - $14,000 + $6,100

Cash flow from financing activities = -$2,500

The cash flow effect of the company's financing activities was therefore -$2,500, indicating the company likely paid back debt or distributed dividends during the past year.