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19 April, 00:36

Sauder Corporation reports the following information: Net income $380,000 Depreciation expense 70,000 Increase in accounts receivable 30,000 Sauder should report cash provided by operating activities of A. $340,000. B. $280,000. C. $420,000. D. $480,000.

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  1. 19 April, 00:37
    0
    Answer: D. $480,000.

    Explanation: OCF (operating cash flow) is usually calculated using the following formula: Operating Cash Flows = Net income + Noncash Expenses (Depreciation Expense) + Changes in Working Capital.

    Net income = $380,000

    Depreciation = $70,000

    Increase in accounts = $30,000

    OCF = $380,000 + $70,000 + $30,000

    = $480,000
  2. 19 April, 00:53
    0
    Cashflow statement gives the true state of affairs of a business with respect to cash and cash equivalent. Whereas a company may report good profit, it may be running an unhealthy business because of its poor management of cash resources. As a result, such a business may run into troubles.

    Cash from operating Activities is a healthy way of evaluating the core operations of the business, to make good investment judgment around the profit reported.

    Net Income = $380,000

    Add Depreciation (non - cash expense) = $70,000

    Deduct Increase in Accounts receivables (non-cash income) = $30,000

    Cash from operations = $420,000.
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Home » Business » Sauder Corporation reports the following information: Net income $380,000 Depreciation expense 70,000 Increase in accounts receivable 30,000 Sauder should report cash provided by operating activities of A. $340,000. B. $280,000. C. $420,000. D.
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