Cash Flow from Operating Activities Net Income 56,000 Add (deduct) items to convert net income to cash basis Depreciation 17,000 v Accounts Receivable Increase (9,000) Inventory Increase (30,000) Prepaid Insurance Decrease 2,000 Accounts Payable Decrease (3,000) Wages Payable Increase 3,000 v Income Tax Payable Decrease (1,000) v Cash Flow Provided by Operating Activities 35,000 Cash Flow from Investing Activities Purchase of Plant Assets (55,000) Cash Flow from Financing Activities Issuance of Bonds Payable Payment of Dividends 55,000 v (29,000) v Cash Provided by Financing Activities 26,000 v Net Change in Cash 6,000 Cash at Beginning of Year 5,000 v Cash at End of Year 11,000 v c. Free cash flow s (49,000) x icash-flow-to-current-liabilities ratio
Cash Flow from Operating Activities Net Income 56,000 Add (deduct) items to convert net income to cash basis Depreciation 17,000 v Accounts Receivable Increase (9,000) Inventory Increase (30,000) Prepaid Insurance Decrease 2,000 Accounts Payable Decrease (3,000) Wages Payable Increase 3,000 v Income Tax Payable Decrease (1,000) v Cash Flow Provided by Operating Activities 35,000 Cash Flow from Investing Activities Purchase of Plant Assets (55,000) Cash Flow from Financing Activities Issuance of Bonds Payable Payment of Dividends 55,000 v (29,000) v Cash Provided by Financing Activities 26,000 v Net Change in Cash 6,000 Cash at Beginning of Year 5,000 v Cash at End of Year 11,000 v c. Free cash flow s (49,000) x icash-flow-to-current-liabilities ratio
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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