Cash Flow and Ratio Analysis

3-2. (Computing cash flows) Given the following information, prepare a statement of cash flows.

  To answer this, I follow the 'measuring cash flows' portion of the text.      

Operating activities

Net income (op inc - tax)

58

Depreciation

12

Profits before depreciation

70

Less increase in acct rec

(25)

Less payment for increase inventory

(30)

Less increase in acct payable

25

Payment for inventory

(5)

Operations cash flows

40

Investing activities

Increase in fixed assets

(35)

Financing activities

Increase in stock

20

Less dividends

(15)

Interest expense

(25)

Financing cash flows

(20)

Decrease in cash

(15)

Beginning cash

20

Ending cash

5

4-5....