In 2012, Eastman Sound Co. had net income of $–70,000. If accruals decreased by $45,000, receivables...

In 2012, Eastman Sound Co. had net income of $–70,000. If accruals decreased by $45,000, receivables and inventories rose by $50,000, and depreciation was $10,000, what was the firm’s cash flow from operating activities?

I know the correct answer is -155,000 but I can't solve it. Help!

Expert Solution

Cash Flow from operating activities = Net Income + Non cash expenses (Including depreciation) + Changes in working capital ( - Increase in Current assets + decrease in current assets + Increase in current liabilities - decrease in current Liabilities)

= - $70,000 + $10,000 + (-$45,000 - $50,000)

= - $ 1,55,000

changes in working capital = - Increase in Current assets + decrease in current assets + Increase in current liabilities - decrease in current Liabilities

Increase in current assets would lead to cash been invested in the assets hence would decrease the cash flow.

Decrease in current liabilities would lead to cash been paid out or taken out of the business system and hence would lead to decrease in cash flow.

Decrease in current assets would release the cash in the business system and hence cash inflow.

Increase in current liabilities would lead to less cash being paid towards settling the liabilities and hence would lead to cash inflow in the business system.

jeff jeffy answered 2 years ago

Khaled Co. reports SR 100000 net income for the year ended 2018, account receivables decreased by...

Khaled Co. reports SR 100000 net income for the year ended 2018, account receivables decreased by SR 7000, account payable decreased by SR 6000, and during the 2018 reported SR 10000 of depreciation expenses. What is Khaled CO. operating cash flow for 2018?

Cash & M/S 30,000 Accruals 20,000 Receivables 70,000 Accounts Payable 60,000 Inventories 120,000 Notes Payable 80,000...

Cash & M/S 30,000 Accruals 20,000 Receivables 70,000 Accounts Payable 60,000 Inventories 120,000 Notes Payable 80,000 Fixed Assets 380,000 L-T Liabilities 140,000 Total Assets 600,000 Common Equity 300,000 Total 600,000 Annual Sales = $1,200,000 Net Income = $48,000 Cost of Goods Sold = $960,000 Number of Shares Outstanding = 30,000 What is the current ratio of the firm? What is the debt ratio of the firm? What is the total asset turnover ratio of the firm? What is the...

Balance Sheet Cash&MS- 30,000 Accruals- 20,000 Receivables- 70,000 Accounts Payable- 60,000 Inventories- 120,000 Notes Payable- 80,000...

Balance Sheet Cash&MS- 30,000 Accruals- 20,000 Receivables- 70,000 Accounts Payable- 60,000 Inventories- 120,000 Notes Payable- 80,000 Fixed Assets- 480,000 L-T Liabilities- 140,000 Total Assets= 700,000 Common Equity- 400,000 Annual Sales- 1,400,000 Cost of Goods Sold- 960,000 Net Income- 63,000 Number of Shares Outstanding- 30,000 What is the current ratio, debt ratio, total asset turnover ratio of the firm? What is the days sales outstanding (DSO) of the firm? (Use a 360-day year.) What is the profit margin of the firm?...

MC Qu. 99 A company had net income... A company had net income of $2,690,000, net...

MC Qu. 99 A company had net income... A company had net income of $2,690,000, net sales of $25,200,000, and average total assets of $8,400,000. Its return on total assets equals: Multiple Choice -312.27%. -33.33%. -10.67%. -32.02%. -3.12%. MC Qu. 109 Carpark Services... Carpark Services began operations in 20X1 and maintains long-term investments in available-for-sale securities. The year-end cost and fair values for its portfolio of these investments follow. The year-end adjusting entry to record the unrealized gain/loss at December...

Wildhorse Co. had net income of $175240 and paid dividends of $40000 to common stockholders and...

Wildhorse Co. had net income of $175240 and paid dividends of $40000 to common stockholders and $19000 to preferred stockholders in 2020. Wildhorse Co.’s common stockholders’ equity at the beginning and end of 2020 was $862000 and $1370000, respectively. Wildhorse Co.’s return on common stockholders’ equity was 11.00%. 14.00%. 10.00%. 16.00%.

Kasravi Co. had net income for 2021 of $600,000. The weighted average number of shares outstanding...

Kasravi Co. had net income for 2021 of $600,000. The weighted average number of shares outstanding for the period was 200,000 shares. Kasravi also had 12,000 stock options issued and outstanding for the entire year of 2021. Each option can be exercised for 1 share of common stock at a price of $30 per share. The average market price of the common stock during the year was $36. What should Kasravi Co. report for diluted earnings per share for the...

Net operating income for the Midal Company for 2018 was: Sales (45,000 units) $450,000 Cost of...

Net operating income for the Midal Company for 2018 was: Sales (45,000 units) $450,000 Cost of goods sold: Direct materials $ 90,000 Direct labor 67,500 Variable overhead 27,000 Fixed overhead 45,000 $229,500 Gross margin $220,500 Selling and administrative expenses: Fixed $140,500 variable 27,000 167,500 Net operating income $ 53,000 To prepare the budget for 2019, sales are forecasted at a 20% volume increase with no change in sales price or variable costs per unit. Fixed overhead...

In 2012, Barney and Co. saw a decrease in sales of 20%. The company had also...

In 2012, Barney and Co. saw a decrease in sales of 20%. The company had also recently purchased equipment to increase productivity, but has incurred the additional expense of paying back the loan for equipment. The loan makes up for 5% of the company's total expenditures for the period (1 year). Include how the company plans to accommodate for the decrease in sales. CREATE A BUDGETING PLAN FOR 2014 Give one suggestion for maximizing the budget in response to the...

Question 21 In 2012, MegaStores reported net income of $5.7 billion, net sales of $164.7 billion,...

Question 21 In 2012, MegaStores reported net income of $5.7 billion, net sales of $164.7 billion, and average total assets of $61.0 billion. What is MegaStores' asset turnover ratio? Question 21 options: A. 0.37 times B. 0.09 times C. 2.7 times D. 10.7 times Question 22 On January 2, 2012, York Corp. replaced its boiler with a more efficient one. The following information was available on that date: Purchase price of new boiler $170,000 Carrying amount of old boiler $10,000...

On January 2, 2017, Chair King Co. purchased a new van for $45,000. The van had...

On January 2, 2017, Chair King Co. purchased a new van for $45,000. The van had an expected useful life of six years, and an expected salvage value of $15,000. The company expected that in those six years, the van would be driven for 150,000 miles based on the following schedule: 2017 – 13,000 miles 2018 – 21,000 miles 2019 – 28,000 miles 2020 – 29,000 miles 2021 – 37,000 miles 2022 – 22,000 miles Required: Assuming a December 31...

Question