Question

                                                                                                          

                                                                     

                                                 

Assets:	2018	2017
Cash	--------	158,000
Accounts receivable	864,000	700,000
Inventories	2,000,000	1,400,000
Total current assets	3,064,000	2,270,000
Net fixed assets	6,000,000	5,600,000
Total assets	---------	-----------
Liabilities and equity:
Accounts payable	1,400,000	1,090,000
Notes payable	1,600,000	1,800,000
Total current liabilities	3,000,000	2,890,000
Long-term debt	2,400,000	2,400,000
Common stock	3,000,000	2,000,000
Retained earnings	664,000	580,000
Total common equity	3,664,000	2,580,000
Total liabilities and equity	-------------	---------------

                    

Assume sales in 2017 and 2018 were the same.  200,000 = depreciation. 500,000 = net income. No dividend paid.

1. Calculate net cash flow from operation

2. Calculate net cash flow from investment.

3. Calculate net cash flow from financing.

4. Calculate net changes in cash

Answer 1

1.

Net Income		500,000
Adjustments to reconcile net income to net operating cash flows
Depreciation Expense	200,000
Increase in Accounts Receivable	(164,000)
Increase in Inventories	(600,000)
Increase in Accounts Payable	310,000
Decrease in Notes Payable	(200,000)	(454,000)
Net cash flows from Operations		46,000

2.

Cash paid to acquire fixed assets	(600,000)
Net cash used in Investing Activities		(600,000)

3.

Cash from issuance of Common Stock	584,000
Net cash flows from Financing Activities		584,000

4.

Cash flows from Operations	46,000
Cash used in Investments	(600,000)
Cash flows from Financing	584,000
Net changes in cash	30,000