Identify the sources and uses of cash for Blackhurst Corporation for 2017 based

Question

Identify the sources and uses of cash for Blackhurst Corporation for 2017 based on the following year-end balance sheets. Please Show your work, thank you

2016                              2017

ASSETS

        Cash 60 45

        Accounts Receivable 150 225

        Inventory 200                                 180

        Net Fixed Assets                     300                                 360

                Total Assets 710                                 810

LIABILITIES & EQUITY

        Bank Loan 80                               140

        Long-term Debt                       280                                270

        Equity 350                                400

                Total Liab. & Equity          710                              810

Explanation / Answer

As we know, any increase in assets or decrease in liabilities is an use of cash. Similarly, any decrease in assets or increase in liabilities is a source of cash.

1. The cash component has decreased from 60 to 45, which is a source of cash.

2. The accounts receivable has increased from 150 to 225. This represents a use of cash as we have extended credit to others.

3. The inventory has decreased from 200 to 180, which is a source of cash.

4.The net fixed assets have increased from 300 to 360. This means cash has been used to buy fixed assets.

5. Bank loan has increased from 80 to 140, which is a source of cash.

6. The long term debt has reduced from 280 to 270. So, cash has been used to pay off debt.

7. Equity has increased from 350 to 400, which is again a source of cash,

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