Question

A company had a $51 000 net loss for 2015. A dividend of $19 000 was paid during the year and depreciation expense for 2015 was $14 000. The balance sheet records the following working capital accounts as below. Calculate whether this company generated any cash from its operations during 2015.

	1 January 2015 ($)	31 December 2015   ($)
Cash	12500	10500
Inventory	15000	9000
Prepayments	5000	2000
Accounts Receivable	11000	15000
Accounts Payable	10000	11000
Accruals	7000	8000

Answer 1

Answer-----------Net cash used by operating activities = $(30,000)

Working

Cash flows from operating activities:
Net income	$    (51,000)
Adjustments to reconcile net income to net cash from operating activities
Depreciation expense	$      14,000
Increase accruals	$        1,000
Increase in accounts receivable	$      (4,000)
Increase in accounts payable	$        1,000
Decrease in prepayments	$        3,000
Decrease in inventory	$        6,000
Net cash used by operating activities	$           (30,000)