Alaska corp. reported the following information for the current year: (1) Net income is $205 million....

Alaska corp. reported the following information for the current year: (1) Net income is $205 million. (2) Acquisitions were $32 million. (3) Customer accounts receivable increased by $12 million. (4) Dividends paid to common shareholders were $8 million. (5) Depreciation expense was $41 million. (6) Income tax payable decreased by $11 million. (7) Long-term debt increased by $28 million. (8) Accounts payable decreased by $6 million. (9) Inventories increased by $17 million.

Required: Based on the above information, calculate the following items: Show your working

a. Cash flow from operating activities.

b. Cash flow from investing activities.

Solutions

Expert Solution

Answer:	Cash flow from operating and investing activities would be calculated as follows:

a.	Cash flow from operating activities would be calculated as follows:
		($ in millions)
	Net income	$ 205
	Add: Depreciation expense	$ 41
	Less: Increase in accounts receivable	$ -12
	Increase in inventories	$ -17
	Decrease in accounts payable	$ -6
	Decrease in income tax payable	$ -11
	Net cash inflow from operating activity	$ 200	(205+41-12-17-6-11)

	(Increase in current asset and decrease in current liability is reduces cash flow from operating activity)

b.	Cash flow investing activity
	Acquisitions	$ -32
	Net cash used in investing activity	$ -32

	Note:
	Dividend paid to common shareholders and increase in Long-term debt are part of financing activity.

ekkarill92 answered 1 year ago

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