Question

Hi-Tech, Inc., reports net income of $66.0 million. Included in that number are depreciation expense of $5.6 million and a loss on the sale of equipment of $1.6 million. Records reveal increases in accounts receivable, accounts payable, and inventory of $2.6 million, $3.6 million, and $4.6 million, respectively. What are Hi-Tech's net cash flows from operating activities? (List cash outflows and any decrease in cash as negative amounts. Round your answers to 1 decimal place. Enter your answers in millions (i.e., $10,100,000 should be entered as 10.1).)

Answer 1

Answer:

Net cash flows from operating activities$69.6

Explanation:

Hi-Tech, Inc

Cash Flows from Operating Activities

Net income $66

Adjustments to reconcile net income to net cash flows from operating activities:

Depreciation expense 5.6

Loss (on sale of equipment)1.6

Increase in accounts receivable(2.6)

Increase in inventory(4.6)

Increase in accounts payable 3.6

Net cash flows from operating activities$69.6

Therefore Hi-Tech's net cash flows from operating activities will be $69.6

Answer 2

Answer:

Hi-Tech's net cash flows from operating activities is $69.6 million

Explanation:

Prepare the Cash Flow from Operating Activities Section Using the Indirect method as follows :

Cash Flow from Operating Activities

Net  income                                                $66.0 million

Adjustment of Non-cash items :

depreciation                                                 $5.6 million

loss on the sale of equipment                     $1.6 million

Adjustment of Working Capital Items :

Increase in accounts receivable               ( $2.6 million)

Increase in accounts payable                     $3.6 million

Increase in accounts inventory                 ( $4.6 million)

Net Cash Flow from Operating Activities $69.6 million