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Using a cash flow statement, explain why ultra Cable Corporation's cash balance has declined so precipitously this past year.

User Mariaelena
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Answer:

I looked for Cable Corporation's income statement and balance sheet:

Cable Corporation

Statement of cash flows

For the year ended December 31, 202x

Cash flows from operating activities:

Net income $357,750

Adjustments to net income:

  • Depreciation expense $197,500
  • Increase in accounts payable $225,000
  • Increase in notes payable $1,125,000
  • Increase in accounts receivable ($850,000)
  • Increase in inventories ($1,626,125) ($928,625)

Net cash provided by operating activities ($570,875)

Cash flows from investing activities:

Purchase of fixed assets ($1,975,000)

Net cash provided by investing activities ($1,975,000)

Cash flows from financing activities:

Issuance of long term debt $2,565,700

Dividends paid ($107,325)

Net cash provided by financing activities $2,458,375

Net decrease in cash ($87,500)

Cash balance at beginning of the year $100,000

Cash balance at the end of the year $12,500

Using a cash flow statement, explain why ultra Cable Corporation's cash balance has-example-1
Using a cash flow statement, explain why ultra Cable Corporation's cash balance has-example-2
User Gython
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