Question

Flow Company has provided the following information for the year ended December 31, 2019: Cash paid for interest, $18,500 Cash paid for dividends, $7,300 Cash dividends received, $5,300 Cash proceeds from bank loan, $26,000 Cash purchase of treasury stock, $9,500 Cash paid for equipment purchase, $25,500 Cash received from issuance of common stock, $35,500 Cash received from sale of land with a $30,500 book value, $23,800 Acquisition of land costing $49,500 in exchange for preferred stock issuance. Payment of a $165,000 note payable by exchanging used machinery with a $75,500 book value and $165,000 fair value.

1. How much was Flow's net cash flow from investing activities?
a. A net inflow of $44,700
b. A net outflow of $51,200
c. A net outflow of $1,700.
d. A net inflow of $1,700.
2. During 2016, Eva's Enterprises cash paid for property, plant and equipment was $675 million and cash flow from operating activities was $6,048 million. The average property, plant, and equipment from the comparative balance sheets were $5,854 million. Eva's capital acquisitions ratio for 2016 is closest to:_______.
a. 8.67.
b. 1.03.
c. 8.82.
d. 8.96.

Answer 1

1. c. A net outflow of $1,700.

2. d. 8.96.

Step-by-step explanation:

1. Cash flow from Investing activity

Particulars Amount

Cash proceeds from sale of Land $23,800

Cash paid for equipment purchase -$25,500

Net cash-flow from investing activities ($1,700)

2. Capital acquisition ratio = (Cash-flow from operations - Dividends) / Cash paid for acquisitions

Capital acquisition ratio = ($6,048 million - $0) / $675 million

Capital acquisition ratio = $6,048 million / $675 million

Capital acquisition ratio = 8.96