Please analyze the given cash flow statement. Anderssen Inc. Statement of cash F
ID: 2761572 • Letter: P
Question
Please analyze the given cash flow statement.
Anderssen Inc. Statement of cash Flow
For the month ended Dec 31,2016
Particulars
Debit
Credit
Cash flow from operating activities
Net income
6,200
Adjustment for depreciation expense
500
Operating profit before working capital changes
6,700
Increase in account payable
800
Increase in account receivable
-500
Increase in merchandise inventory
-6,900
Increase in accrued liability
100
Increase in tax payable
300
Cash generated from operating activity
500
500
Cash flow from investing activities
Purchase of equipment
-700
Long term investment
-300
Cash generated from investing activities
-1,000
-1,000
Cash flow from Financing activities
Long term debts
200
Issue of shares of common stock
2,600
Cash generated from Financing activities
2,800
2,800
Net increase in cash and cash equivalent
2,300
Operating cash Balance
1,000
Closing Cash Balance
3.300
Anderssen Inc. Statement of cash Flow
For the month ended Dec 31,2016
Particulars
Debit
Credit
Cash flow from operating activities
Net income
6,200
Adjustment for depreciation expense
500
Operating profit before working capital changes
6,700
Increase in account payable
800
Increase in account receivable
-500
Increase in merchandise inventory
-6,900
Increase in accrued liability
100
Increase in tax payable
300
Cash generated from operating activity
500
500
Cash flow from investing activities
Purchase of equipment
-700
Long term investment
-300
Cash generated from investing activities
-1,000
-1,000
Cash flow from Financing activities
Long term debts
200
Issue of shares of common stock
2,600
Cash generated from Financing activities
2,800
2,800
Net increase in cash and cash equivalent
2,300
Operating cash Balance
1,000
Closing Cash Balance
3.300
Explanation / Answer
Overall company's cash has increased over the period .This is mainly due to cash flow from Financing activity Company has raised significant amount of money during the year by issuig stock. On the Other hand major reason for usage of funds is the investing actvity wherein company has invested considerable amount in purchase of equiment Also Company has made significant investment in Merchandise Inventory Above usage and investment indicates that company is planning to expand its operations
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