Question

Suppose Green Mountain Coffee Roasters (GMCR) sold a piece of land during the year for $30 million. GMCR also bought a long term investment in a small competitor for $10 million, and, at the end of the year, GMCR purchased computers for $1 million to replace its current equipment.

What would be the net impact of these transactions in the Investing Section of the statement of cash flows?

Answer 1

The net impact of Green Mountain Coffee Roasters' transactions in the investing section of the statement of cash flows results in a $19 million cash inflow.

Step-by-step explanation:

The question regarding Green Mountain Coffee Roasters and the transactions affecting their cash flow statement involves the investing section of the statement of cash flows.

In evaluating the net impact of these transactions, we must consider them individually: the sale of land for $30 million is a cash inflow (positive), the purchase of a long-term investment in a competitor for $10 million is a cash outflow (negative), and the acquisition of computers for $1 million, which is also a cash outflow (negative).

Therefore, the net impact of these transactions in the investing section would be:

When these are totaled together, the net impact is:

Net impact = $30 million - $10 million - $1 million = $19 million cash inflow