Question

Using the excerpt from the Pet World Company statement of cash flows, analyze thoroughly the cash flow from operating activities. Offer possible reasons for the changes identified Operating activities (USD) 2016 2015 Net income 4200 -14700 Depreciation and amortization 32700 32550 Loss on disposal of PPE 16500 4650 Increase (decrease) in cash resulting from changes in: Accounts receivable -15150 -13800 Inventories -53250 -84750 Accounts payable and accrued expenses 82050 36300 Net cash provided (used) by operating activities 58650 -39750 i - B I $S net loss is less in comparison to previous year U auto.proctoru.com is sharing your scre higher amount of non cash expenses are deduct

Answer 1

Depreciation and amortization

There is slight increase in the value compared to 2015 though a part of ppe is disposed of.... assuming the company follows slm basis it is possible that there is a purchase of asset which will be reflected in investing activities if paid in cash

Accounts receivable

There is an increase in the accounts receivable by which we can say that there is increase in sales if the cash to credit sales ratio remains same or there are more credit sales if there is a change in the ratio

Accounts payable and accrued expenses

The company might be in cash crunch during the period due to which there is more amount of accrued expenses and payables

Inventory

The inventory might have been purchased in excess or there is decrease in sales due to which the cash is stuck there....however the company did well in this aspect when compared to the last year

Although much of the this year's performance is way better than the last year where company suffers a lot due to cash crunch