Question

Stuart Company had Net Income for 2017 of $8,100,000. The firm invested $1,000,000 in manufacturing equipment during 2016 but made no additional capital investments in 2017. The equipment is being depreciated over five years using straight-line depreciation, starting in 2016. 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

Stuart Company
Cash Flow Statement
For the year ended December 31 2017
($ in Thousands)
A. Cash Flows from Operating Activity
Net Income		$      8,100.00
Adjustments to reconcile net income to net cash flows from operating activities
Depreciation expense	$      200.00
		$          200.00
Net cash flow from Operating activities		$      8,300.00
B. Cash flows from Investing Activities
C. Cash Flows from Financing activities
Net Increase (Decrease) in Cash [A+B+C]		$      8,300.00

Equipment is purchased in 2016 hence not a part of cash flow in 2017.

Cash flow from investing activities and financing activities will be zero.

Depreciation on equipment is (1000/5) $200 per year for 5 years.

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

Net cash flow in 2017 = $8300                                                                       ($ in Thousands)