Question

Given the following selected information on McMillen's Chocolate, Inc., calculate Cash Flow from Operating Activities for 2012. Show your work.

2011 2012
EAT $ 600,000 800,000
Depreciation Exp. 100,000 120,000
Dividends 400,000 550,000
Accounts Receivable 1,500,000 1,000,000
Inventory 3,500,000 4,100,000
Accts. Payable 350,000 350,000
Accruals 250,000 200,000
Long-Term Debt 2,300,000 2,000,000
Common Stock 2,200,000 3,000,000
Interest expenses 50,000 60,000
Retained Earnings 6,150,000 6,400,000

Answer 1

Cash flow from operating activities for the Year 2012 = $770000.

Step-by-step explanation:

Particulars Amount ($)

Earnings after tax (EAT) 800,000

+ Depreciation (Non-cash expenditure) 120,000

Operating profit before working 920,000

capital changes

+ Decrease in accounts receivable 500,000

(1,500,000 - 1,000,000)

- increase in inventory 600,000

(4,100,000 - 3,500,000)

- Decrease in accrual 50,000

(250,000 - 200,000)

Cash flow from operating activities 770,000

Conclusion:- Cash flow from operating activities for the Year 2012 = $770000.