4 NEW TOPIC Corporation Balance Sheet NEW TOPIC Corporation

4. NEW TOPIC Corporation Balance Sheet NEW TOPIC Corporation Balance Sheet (in SMillions) Assets Liabilities & Owners\' Equity Last Current Year Year Last Current Year Year st Year Current Assets Current Liabilities Cash Accounts Receivable Inventory 5 213 S 281 Accounts Payable S 385 S 445 S 586 S 646 Long-Term Debt 2998 3,015 s 3,584 s 3,661 s 1966 S 2789 457 461 Notes Payable 66554 554 Total Total $1,335 $ 1.296 Fixed Assets PP&E; Accumulated Dep. 909 1274 Net PP&E; $ 5,124 $ 6,428 Total Liabilities $ 4215 S 5 154 Owners Equity 55.550 6450 Total Liab. And Equity 5.650 6.450 Total Assets NEW TOPIC Corporation Income Statement Current Year NEW TOPIC Corporation Current Year Income Statement (in SMillions) Sales Cost of Goods Sold Depreciation Earnings Before Interes and Taxes S 2,877 1,012 $ 1.500 1,500 Earmings Before Taxes Taxes Net Income Retained Eamings Dividends $ 823 S 157 Use the financial statements for NEW TOPIC Corporation to answer the following question. What is the cash flow from operations in millions?

Solution

Answer

Details

Net

Cash Flow from Operating Activities

Net Profit before tax

1,500

Add: Non Cash and Non Operating Expenses

Depreciation

365

Operating profit before Working Capital changes

1,865

Add: Increase in Current Liabilities And decrease in Current Assets

Increase in Accounts Payable

60

Decrease in Inventory

111

Less: Decrease in Current Liabilities And Increase in Current Assets

Increase in Accounts Receivable

(4)

Operating Profit before tax

2,032

Less: Tax Paid

(520)

Cash Flow from Operating Activities (A)

1,512

Cash Flow from Investing Activities

Purchase of PP&E

(1,304)

Cash Used in Investing Activities (B)

(1,304)

Cash Flow from Financing Activities

Increase in Long term Debt

17

Dividend Paid

(157)

Cash Used in Financing Activities ( C )

(140)

Increase in Cash Flow (A+B+C)

68

Opening Cash

213

Closing Cash

281

Equipment A/c

In $

In $

To Bal b/d

5,124

To Bank

1,304

By Bal c/d

6,428

Total

6,428

Total

6,428

Acc. Depreciation A/c

In $

In $

By Bal b/d

909

By P&L

365

To bal. c/d

1,274

Total

1,274

Total

1,274

	Details	Net
Cash Flow from Operating Activities
Net Profit before tax	1,500
Add: Non Cash and Non Operating Expenses
Depreciation	365
Operating profit before Working Capital changes	1,865
Add: Increase in Current Liabilities And decrease in Current Assets
Increase in Accounts Payable	60
Decrease in Inventory	111
Less: Decrease in Current Liabilities And Increase in Current Assets
Increase in Accounts Receivable	(4)
Operating Profit before tax	2,032
Less: Tax Paid	(520)
Cash Flow from Operating Activities (A)		1,512
Cash Flow from Investing Activities
Purchase of PP&E	(1,304)
Cash Used in Investing Activities (B)		(1,304)
Cash Flow from Financing Activities
Increase in Long term Debt	17
Dividend Paid	(157)
Cash Used in Financing Activities ( C )		(140)
Increase in Cash Flow (A+B+C)		68
Opening Cash		213
Closing Cash		281