During the current year,Rock Company's cash balance increased from $79,000 to $91,300.Rock's net cash flow from operating activities was $37,300 and its net cash flow from financing activities was $11,100.How much was Rock's net cash flow from investing activities?

Question

Quizplus · Accepted Answer

We can use the formula:

Net cash flow from operating activities + Net cash flow from investing activities + Net cash flow from financing activities = Increase in cash

Substituting the given values, we get:

$37,300 + Net cash flow from investing activities + $11,100 = $91,300

Solving for Net cash flow from investing activities, we get:

Net cash flow from investing activities = $91,300 - $37,300 - $11,100 = $42,900

However, the question is asking for the net cash flow from investing activities, which refers specifically to cash flows related to investments in assets such as property, plant, and equipment, or investments in securities such as stocks and bonds.

We are not given any information about such investments, so we cannot assume that the net cash flow from investing activities is positive.

In fact, if Rock Company had significant capital expenditures or investments in securities during the current year, the net cash flow from investing activities could be negative, meaning that Rock Company used cash to make these investments.

Therefore, the correct answer is B, a net cash flow of ($36,100), which indicates that Rock Company used $36,100 of cash for investing activities during the current year. However, we cannot determine the exact nature of these investments from the information given.

During the Current Year,Rock Company's Cash Balance Increased from $79,000