Hampton Industries had $40,000 in cash at year-end 2017 and $14,000 in cash at year-end 2018....

Hampton Industries had $40,000 in cash at year-end 2017 and $14,000 in cash at year-end 2018. The firm invested in property, plant, and equipment totaling $290,000. Cash flow from financing activities totaled +$160,000. Round your answers to the nearest dollar, if necessary.

What was the cash flow from operating activities? Cash outflow, if any, should be indicated by a minus sign.
$
If accruals increased by $20,000, receivables and inventories increased by $165,000, and depreciation and amortization totaled $47,000, what was the firm's net income?
$

Can you please explain how you got the answer please. Thank you

Expert Solution

Ans a.	Change in Overall Cash in 2018 = Cash flows from Operating Activities + Cash flow from Investment Activity + Cash flow from financing activities

	Cash outflow due to investment in Property, Plant and Equipment	-290000

	Cash flow from Financing Activities	160000

	Opening Cash in 2018	40000

	Closing Cash in 2018	14000

	Change in Overall Cash in 2018 Closing Cash Less Opening Cash	-26000

	Cash flow from Operating Activities= Change in Overall Cash in 2018-Cash flow from Investment Activity-Cash flow from Financing Activities	104000

Ans b.	Cash flow from Operating Activities	104000

	Depreciation and Amortisation	47000

	Changes in Working Capital

i	Increase in Receivables and Inventories	-165000
ii	Increase in Accruals	20000
	Working Capital Changes (i+ii)	-145000

	Cash flow from Operating Activities = Net Income + Depreciation + Changes in Working Capital
	Net Income = Cash flow from Operating Activities - Depreciation - Changes in Working Capital
	Net Income	202000

We got both the answers from the Cash flows being calculated by indirect method. The complete working has been made through detailed formula. In case of any confusion do drop your comment in the comment below will surely help you.

If you are satisfied with the Answers and Workings kindly give a thumbs up or else thumbs down.

jeff jeffy answered 2 years ago

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