A company has net income this year of $45,500.Last year,the company's net working capital was $14,300 and this year's net working capital is $15,200.Depreciation this year is $7,300.What is cash from operations this year?
A) Net income
B) Add depreciation
C) Subtract change in NWC
D) CFO

Question

Quizplus · Accepted Answer

Cash from operations (CFO) is calculated by adding back non-cash expenses such as depreciation to net income, and then subtracting the change in net working capital (NWC) from the result. Therefore, the correct choice is to add back depreciation (choice B) and subtract the change in NWC (choice C) from net income, resulting in the calculation of CFO (choice D). Choice A (net income) is incorrect, as it only represents one component of the CFO calculation.

A Company Has Net Income This Year of $45,500