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Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
ISBN: 9781337395250

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BuyFindarrow_forward

Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
ISBN: 9781337395250
Textbook Problem

STATEMENT OF CASH FLOWS Hampton Industries had $39,000 in cash at year-end 2017 and $11,000 in cash at year-end 2018. The firm invested in property, plant, and equipment totaling $210,000. Cash flow from financing activities totaled +$120,000.

  1. a. What was the cash flow from operating activities?
  2. b. If accruals increased by $15,000, receivables and inventories increased by $50,000, and depreciation and amortization totaled $25,000, what was the firm's net income?

a.

Summary Introduction

To calculate: a. cash flow from operating activities of Company H.

Introduction:

Statement of Cash Flow:

The statement of cash flow is a part of the financial statements that are included in the annual report of a company. It reports the cash generated or used by the business in a specified period.

Cash Flow from Operating Activities:

The cash generated over and above required by the business operations is called as the reported cash flow from the operating activities. Statement of cash flow reports the net cash flow generated or consumed by the business.

Explanation

Statement of cash flow for Company H:

Particulars

Amount

($)

Net cash given by operating activities62,000
Net cash utilized in investing activities(210,000)
Net cash given by financing activities120,000
Net change in cash(28,000)

Working notes:

Formula to  

Change in cash=Cash at the end of the year-Cash at the beginning of the year

Compute change in cash is as follows:

Change in cash=Cash at the end of the year-Cash at the beginning of the year=$11,000-$39,000=$28,000

Hence, the change in cash flow is $28,000

b.

Summary Introduction

To compute: The net income of Company H.

Introduction:

Statement of Cash Flow:

The statement of cash flow is a part of the financial statements that are included in the annual report of a company. It reports the cash generated or used by the business in a specified period.

Cash Flow from Operating Activities:

The cash generated over and above required by the business operations is called as the reported cash flow from the operating activities. Statement of cash flow reports the net cash flow generated or consumed by the business.

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