Question

Net income:	$179
Depreciation:	$47
Issuance of new stock:	$10
Repurchase of debt:	$18
Sale of property:	$22
Purchase of equipment:	$80
Dividend payments:	$11
Interest payments:	$27

   

Given the above information for Hetrich, Inc., calculate the operating cash flow, investment cash flow, financing cash flow, and net cash flow. (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest whole number.)

Answer 1

Here we  will follow US GAAP ASC 230

Interest paid or received are classified as operating activities.

Cash flows from operating activity = net income + depreciation = $ 179 + 47 = $226

Investing cash flows = sale of property - purchase of equipment = 22 - 80 = - $ 58

Financing cash flows = issue of stock - repurchase of debt - payment of dividends = $ 10 - 18 - 11 = - $ 19

Net cash flows = operating cash flows + investing cash flows + financing cash flows = $ 226 - 58 - 19 = $ 149

Here we will follow IFRS  IAS 7

Interest received or paid are classified in a consistent manner as either operating, investing or financing cash activities.

Here we interest payment are classified financing activity.

Cash flows from operating activity = net income + depreciation + interest payment = $ 179 + 47 + 27 = $253

Investing cash flows = sale of property - purchase of equipment = 22 - 80 = - $ 58

Financing cash flows = issue of stock - repurchase of debt - payment of dividends - interest payment = $ 10 - 18 - 11- 27 = - $ 46

Net cash flows = operating cash flows + investing cash flows + financing cash flows = $ 253 - 58 - 46 = $ 149