Profit before taxes $46,000
Net profit for the year 34,000
Depreciation 40,000
Adjustments in non-cash working capital 17,000 outflow
Accounts
Using the information above, what was the change in cash flow under operating activities?
A) a decrease of $ 24,000
B) an increase of $ 17,000
C) an increase of $ 57,000
D) an increase of $ 90,000

Question

Quizplus · Accepted Answer

The change in cash flow under operating activities can be calculated by starting with the net profit for the year and then adding back non-cash expenses (depreciation) and adjusting for changes in working capital. Here, it's $34,000 (net profit) + $40,000 (depreciation) - $17,000 (outflow from working capital adjustments) = $57,000 increase.

Profit Before Taxes $46,000