saved 12 13 The statement of cash flows cannot help address

saved 12 & 13 The statement of cash flows cannot help address questions such as: Multiple Choice How is the increase in investments financed? What is the source of cash for new plant assets? How much cash is generated from or used in operations? How much of the company\'s revenues have been retained as profit? Why is cash flow from operations different from income?

Solution

1) How much of the company\'s revenue has been retained as profit

2) Receipt of cash sales

3) Cash flow from operations / total average assets = 205000 / 1660000 = 12.35%

4) Purchases = Ending inventory + Cost of goods sold - opening inventory = 188000 + 720000 - 20000 = 708000

Payments for merchandise = Ending balance + purchases - opening balance = 84000 + 708000 - 80000 = 712000