Question

Selected data derived from the income statement and balance sheet of National Beverage Co. for a recent year are as follows:

1	Income statement data (in thousands):
2	Net income	$43,993.00
3	Depreciation expense	10,651.00
4	Losses on inventory write-down and fixed assets	7.00
5	Other noncash items	(187.00)
6	Balance sheet data (in thousands):
7	Increase in accounts receivable	5,679.00
8	Increase in inventory	7,509.00
9	Increase in prepaid expenses	2,239.00
10	Decrease in accounts payable and other current liabilities	1,341.00

Required:

A.	Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method for National Beverage Co. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments, if required.
B.	Interpret your results in part (a).

Answer 1

A. Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method for National Beverage Co.

National Bevarage Co.
Statement of Operating Cash Flows
For the year ended XXXX
Particulars	Amount ($) (in thousands)	Amount ($) (in thousands)
Cash Flows from operating activities:
Net Income		43,993
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation expense	10,651
Losses on inventory write down and fixed assets	7
		10,658
Changes in current operating assets and liabilities:
Increase in account receivable	-5,679
Increase in Inventory	-7,509
Increase in prepaid expenses	-2,239
Decrease in accounts payable and other current liabilities	-1,341
		-16,768
Net Cash provided by Operating Activities		37,883

B. Company is having a positive cash flow which shows that the company is doing good financially.

Also an increase in account receivable shows that sales increased and decrease in accounts payable shows that the company is paying creditors from enough cash.