Question

MC algo 2-33 Cash Flow Identity Rousey, Inc., had a cash flow to creditors of $16,470 and a cash flow to stockholders of $6.866 over the past year. The company also had net fixed assets of $49.430 at the beginning of the year and $56,800 at the end of the year. Additionally, the company had a depreciation expense of $11.988 and an operating cash flow of $50,399. What was the change in net working capital during the year! Multiple Choice O $6,273 0 $7,705 0 $7.370 0 $9.504 0 56.980

Answer 1

- 56800 Cash flow to Creditors = 16 470 Cash flow to stockholders= 6866 Net fixed Assets at beginning - Net fixed Assets at end of year: Deprecation expenses = 11988 Operating Cash flour = 50399 Now as the depreciation is a non cath expenn so it will not affect the working capital. Also, as the fixed Asset balances have been changed from beginning to end but not the current Anets balances therefore it will not affect the is working capital. As the case of operating cash flow, change in working 8 capital is refognised by y balance of an As Current Asset Increases, of cash flow & from operations will decrean I balance of an Current Asset decuases. f cash flowl from operations increase Il balence of an Cibrent liability inouares Hout from operations will increase.

De Il balance of current liability decemain. cash B flow froud operations decrean. In this case, As the Cash has been paid to Creditors , it will affect the working capital Also as the cash has been paid to stockholders it will affect the working copital. Therefore, Net changes in working capital is Operating cash flow 50399 Depreciation expenses. 11988 Cash flow to creditors. 16470 Cash flow to stockholders. 6866 Chande in fixed Asset balance (profit) 7370 NA Changes in Working Capital 7705 ID So in this multiple choice is correct. questions , part to