Cash Flow from Operating Activities (Indirect Method)
The following information was obtained from Galena Company’s comparative balance sheets:
End of Year | Beginning of Year | |
---|---|---|
Cash | $61,560 | $29,160 |
Accounts receivable | 142,560 | 113,400 |
Inventory | 178,200 | 158,760 |
Prepaid rent | 19,440 | 25,920 |
Long-term investments | 68,040 | 110,160 |
Plant assets | 486,000 | 343,440 |
Accumulated depreciation | (129,600) | (120,600) |
Accounts payable | 77,760 | 64,800 |
Income tax payable | 12,960 | 19,440 |
Common stock | 392,040 | 298,800 |
Retained earnings | 343,440 | 294,800 |
Capital expenditures | 30,000 |
Assume that Galena Company’s income statement showed depreciation expense of $9,000, a gain on sale of investments of $10,000, and a net income of $90,000. (a) Calculate the cash flow from operating activities using the indirect method and (b) compute Galena’s operating-cash-flow-to-capital-expenditures ratio.
a. Use negative signs with cash outflow answers.
Cash Flow from Operating Activities | |||
---|---|---|---|
Net Income | $ | ||
Add (deduct) items to convert net income to cash basis | |||
Depreciation | |||
Gain on sale of investments | |||
Accounts Receivable | |||
Inventory | |||
Prepaid Rent | |||
Accounts Payable | |||
Income Tax Payable | |||
Cash Provided by Operating Activities | $ |
b. Operating-cash-flow-to-capital-expenditures ratio (Round answer to two decimal points)