What is the firm's cash flow from operating activities?

Question

Quizplus · Accepted Answer

The firm's cash flow from operating activities is calculated by adjusting net income for non-cash items and changes in working capital. Using the information given in the question, we can calculate this as follows:

Net income = $200,000 
Add: 
Depreciation expense = $25,000 
Decrease in accounts receivable = $3,000 
Increase in inventory = -$10,000 
Decrease in accounts payable = -$8,000 
Net cash flow from operating activities = $200,000 + $25,000 + $3,000 - $10,000 - $8,000 = $210,000

Therefore, the best choice is B, which is closest to the calculated cash flow from operating activities of $210,000.

What Is the Firm's Cash Flow from Operating Activities