Questionable Venture, Inc. had net income of $1.75 million in the fourth quarter

ID: 2761823 • Letter: Q

Question

Questionable Venture, Inc. had net income of $1.75 million in the fourth quarter of 2013. They purchased $3.0 million in new manufacturing equipment, sold some old equipment for $85,000, their inventories fell by $110,000, their interest payments increased from $40,000 in the previous quarter to $45,000 this quarter, their accounts receivable rose by $155,000, A/P rose by $85,000, and they had D&A of $200,000. Given this information, what would their net cash flows from operating activities be?

Explanation / Answer

Questionable Venture, Inc.

Statement of Cash Flows

For the Years Ending

year

Cash Flows from Operating Activities

Net Income

$1,750,000

Add Expenses Not Requiring Cash:

Depreciation

200,000

Subtract Increase in Accounts Receivable

(155,000)

Add Increase in Accounts Payable

85,000

add decrease in Inventory

110,000

Net Cash from Operating Activities

$1,990,000