Question

Torche Corporation had Net Income for 2017 of $9,400,000. The firm invested $2,000,000 in manufacturing equipment during 2017. The equipment is being depreciated over five years using straight-line depreciation, starting in 2017. Assuming no other adjustments to cash flow than those mentioned here, create a statement of cash flows for 2017 with amounts in thousands. What is the Net Cash Flow in 2017? Please specify your answer in the same units as the statement of cash flows.

Answer 1

Torche Corporation
Cash Flow Statement
For the year ended December 31 2017
($ in Thousands)
A. Cash Flows from Operating Activity
Net Income		$      9,400.00
Adjustments to reconcile net income to net cash flows from operating activities
Depreciation expense	$      400.00
		$          400.00
Net cash flow from Operating activities		$      9,800.00
B. Cash flows from Investing Activities
Purchase of Equipment	$(2,000.00)
Net Cash flows from Investing activities		$    (2,000.00)
C. Cash Flows from Financing activities
Net Increase (Decrease) in Cash [A+B+C]		$      7,800.00

Equipment is purchased in 2017 and will be shown in investing activities as a cash outflow

Deoreciation on equipment is (2000/5) $400 per year for 5 years.

Depreciation is a non cash expense hence added to income to calculate operating cash.

Answer- Net cash flows in 2017 $7,800.. ($ in Thousands)