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Category Prior Year Current Year Accounts payable 3,119.00 5,956.00 Accounts receivable 6,975.00 8,909.00 Accruals 5,779.00 6,033.00...

Category Prior Year Current Year
Accounts payable 3,119.00 5,956.00
Accounts receivable 6,975.00 8,909.00
Accruals 5,779.00 6,033.00
Additional paid in capital 19,546.00 13,016.00
Cash ??? ???
Common Stock 2,850 2,850
COGS 22,805.00 18,431.00
Current portion long-term debt 500 500
Depreciation expense 1,049.00 1,025.00
Interest expense 1,262.00 1,122.00
Inventories 3,074.00 6,738.00
Long-term debt 16,942.00 22,407.00
Net fixed assets 75,935.00 73,976.00
Notes payable 4,021.00 6,509.00
Operating expenses (excl. depr.) 19,950 20,000
Retained earnings 35,600.00 34,487.00
Sales 46,360 45,961.00
Taxes 350 920

What is the firm's cash flow from financing?

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#2

Category Prior Year Current Year
Accounts payable 3,119.00 5,956.00
Accounts receivable 6,975.00 8,909.00
Accruals 5,779.00 6,033.00
Additional paid in capital 19,546.00 13,016.00
Cash ??? ???
Common Stock 2,850 2,850
COGS 22,805.00 18,431.00
Current portion long-term debt 500 500
Depreciation expense 1,049.00 1,025.00
Interest expense 1,262.00 1,122.00
Inventories 3,074.00 6,738.00
Long-term debt 16,942.00 22,407.00
Net fixed assets 75,935.00 73,976.00
Notes payable 4,021.00 6,509.00
Operating expenses (excl. depr.) 19,950 20,000
Retained earnings 35,600.00 34,487.00
Sales 46,360 45,961.00
Taxes 350 920

What is the firm's cash flow from investing?

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Expert Solution

#1 Cash Flow from Financing

Cash generated or spent on financing activities shows the net cash flows involved in funding the company's operations. Financing activities include:

  • Dividend payments
  • Stock repurchases
  • Bond offerings–generating cash
  • Taking loans or repayment of loans
  • Payment of interest on loans taken

In the given question, There are three items of finance:

1. Current portion Long term debt- 500 which s constant in both the years showing no effect on cashflow

2. Interest expense - The repayment of the interest expense is not given, hence assumed as included in the long term loan.

3. Long term debt:

Opening balance for Current year 16,942.00
Add: Interest of current year 1,122.00
18,064.00
Closing balance for the current year 22,407.00
Net cash inflow 4,343.00
Since there is an increase in Long term debt amount, it looks like the organisation have raised a long term loan
The difference can be the net amount received i.e., the repayment if any made by the organisation and loan raised

Answer: From the above, the Net cashflow from financing activity can be  4343.

#2 Cash Flow from Investing

Cash flows from investing activities provides an account of cash used in the purchase of non-current assets–or long-term assets– that will deliver value in the future.

Below are a few examples of cash flows from investing activities along with whether the items generate negative or positive cash flow.

  • Purchase of fixed assets–cash flow negative
  • Purchase of investments such as stocks or securities–cash flow negative
  • Lending money–cash flow negative
  • Sale of fixed assets–cash flow positive
  • Sale of investment securities–cash flow positive
  • Collection of loans and insurance proceeds–cash flow positive

In the given question, There are two items of investing activities

1. Additions paid in capital - Assuming that the current year additions given are the amount paid during current year doesnot include any amount from previous year -13016 is inflow

2. Fixed assets:

Particulars Amount
Opening net fixed assets 75,935.00
Less: depriciation during current year 1,025.00
74,910.00
Closing net fixed asseets 73,976.00
Net cash inflow 934.00

Since the opening net fixed assets after considering current year depreciation is more than the Closing net fixed asset, it seems like there is sale of fixed asset.

Answer: Total Cashflow from the investing activties -   Additions paid in capital -13016 (Inflow)

Fixed assets    - 934 (Inflow)

Total = 13950

jeff jeffy answered 2 years ago
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