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A company had net income of $270,570. Depreciation expense is $28,043. During the year, Accounts Receivable...

A company had net income of $270,570. Depreciation expense is $28,043. During the year, Accounts Receivable and Inventory increased by $14,911 and $25,253, respectively. Prepaid Expenses and Accounts Payable decreased by $2,897 and $7,801, respectively. There was also a loss on the sale of equipment of $7,725. How much cash was provided by operating activities?

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Answer #1

Cash flow from operating activities

Net Income $270570

add: depreciation $28043

Loss on sale of equipment $7725

Operating profit before working capital changes $306338

less: Increase in inventory ($25253)

less: increase in accounts receivable ($14911)

add: Decrease in prepaid expenses $2897

less: Decrease in accounts payable (7801)

cash flow from operating activities $261267

Decrease in current asset means Cash inflow ( Cash is released blocked from current assets)

Increase in current assets means cash outflow( cash is blocked in current assets)

Decrease in current liability is cash outflow

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