Ask Question
16 July, 14:23

Sheen Awnings reported net income of $90 million. Included in that number were depreciation expense of $3 million and a loss on the sale of equipment of $2 million. Records reveal increases in accounts receivable, accounts payable, and inventory of $1 million, $4 million, and $3 million, respectively. What were Sheen's cash flows from operating activities?

+3
Answers (1)
  1. 16 July, 16:53
    0
    The Sheen's cash flows from operating activities is $95 million

    Explanation:

    Cash flows from operating activities:

    The cash flow from operating activities includes all those activities which are of short term period. Like changes in working capital or we can say increase in currents assets or decrease in current assets or increase/decrease in current liabilities.

    The increase in current liabilities increase the cash balance, hence it is added and decrease in current liabilities decrease the cash balance. But in the case of current asset, it is opposite.

    The depreciation expense and loss on sale of equipment is added. So, we take them in the computation part.

    The cash flow from operating activities is equals to

    = Net income + depreciation expenses + loss on sale of equipment - increase in accounts receivable + increase in accounts payable - increase in inventory

    = $90 + $3 + $2 - $1 + $4 - $3

    = $95 million

    Hence, the Sheen's cash flows from operating activities is $95 million
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Sheen Awnings reported net income of $90 million. Included in that number were depreciation expense of $3 million and a loss on the sale of ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers