Question

Use the income statement and the list of changes to answer the question.

Torche Corporation Income Statement January 1 to December 31, 2017 (amounts in thousands)
Revenue	9,100
Cost of Goods Sold (COGS)	2,730
Gross Income	6,370
Sales, General, & Administrative Expenses (SG&A)	910
Depreciation Expense	500
Other Expenses	600
Earnings Before Interest & Taxes (EBIT)	4,360
Interest	180
Pre-Tax Income	4,180
Income Taxes	1,672
Net Income	2,508

Between January 1 and December 31, 2017:

1. Accounts Receivable increase by $800,000
2. Accounts Payable decrease by $400,000
3. Gross Property, Plant, & Equipment increase by $5,400,000
4. Long Term Debt increases by $100,000

Assume no other changes

What is the Net Cash Flow?

Please specify your answer in the same units as the income statement.

Answer 1

Torche Corporation
Cash Flow Statement
For the ended December 31, 2017
Cash Flow from Operating Activities:
Net Income		$          2,508.00
Add: Adjustments
Depreciation expense	$            500.00
Decrease in Accounts Payables	$           (400.00)
Increase in Accounts receivables	$           (800.00)
		$        (700.00)
A. Cash Flow from Operating Activities		$          1,808.00
Cash Flow from Investing Activities:
Purchase of Property, Plant, & Equipment	$        (5,400.00)
B. Cash flow from Investing Activities		$        (5,400.00)
Cash Flow from Financing Activities:
Cash from long term debts	$              100.00
C. Cash Flow from Financing Activities		$              100.00
[A+B+C] Net cash flow		$        (3,492.00)

Answer—Net cash flow = $(3492)

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