Solve the following Pizza International, Inc. operates 740 family restaurants ar

ID: 2436927 • Letter: S

Question

Solve the following

Pizza International, Inc. operates 740 family restaurants around the world. The company's annual report contained the following information (in millions) ting Activities (9.481) $ (9,481) Net Loss Depreciation Increase in Receivables Decrease in Inventory Increase in Prepaid Expenses Decrease in Accounts Payable Decrease in Accrued Liabilities Increase in Income Taxes Payable Payments on Notes Payable Cash Paid for Equipment 33,306 644 2,283 721 12,693 29,075 The following summarized income statement for Pizza International, Inc. (in millions) Revenues Cost of Sales $136,600 45,550 Gross Proft Salary and Wages Expense Depreciation Other Expenses 91,050 56,840 33,306 7,782 Net Loss before Income Tax Expense Income Tax Expense (6,878) 2,603 Net Loss $ (9,481) Required: 1. Based on this information, compute cash flow from operating activities using the direct method. Assume that Prepaid Expenses and Accrued Liabilities relate to other expenses. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions. (i.e., 10,000,000 should be entered as 10).) PIZZA INTERNATIONAL, INC Cash Flow from Operating Activities Direct Method

Explanation / Answer

(1) Cash Flow from Operating Activities – Direct Method :-

Cash collect from customers

(136600{Revenue} – 171{Increase Receivables})

136429

Cash Paid to Supplier

(45550{Cost of sales} + 2283{decrease a/c payable} – 644{decrease inventory})

-47189

Salary & Wage Exp

-56840

Other Exp

(7782 + 666{increase prepaid exp} + 721{decrease accrued liability}

-9169

Cash Paid for Income Tax

(2603 – 1863{Increase Income Tax Payable}

-740

Cash Flow from Operating Activities

22491

(2) The Primary reason for the net loss was the Depreciation Exp & it would not affect cash flowfrom operating activities