A firm reported $130 million increase in cash over a year. It also reported $400 million in cash...

Question:

A firm reported $130 million increase in cash over a year. It also reported $400 million in cash flow from operations, and a net $75 million paid out to claimants in financing activities.

How much did the firm invest in operations? Refer to the information to calculate the investment in operations.

Investing Activites:

The investing activities are the activities of a firm where the firm purchases long-term fixed assets to use in business operations, invests in the shares of another company as an investor, sell the shares held in another company and sell the fixed assets, etc. The cash flow used by the investing activities represents negative cash flow and the cash flow provided by investing activities represents positive cash flow.

Answer and Explanation:


Answer:

The firm invested $195,000,000 in investment in operations (Investing activities).

Explanation:

As per the firm's data:

  • Increase in cash = $130,000,000
  • Cash flow from operations = $400,000,000
  • Cash used in financing activities = -$75,000,000
  • Cash flow used for investment in operations = ?

Computation:

  • Increase in cash flow = Cash flow from operations + Cash flows from investment in operations + Cash flow from financing activities
  • Cash flows from investment in operations = $130,000,000 - $400,000,000 - (-$75,000,000)
  • Cash flows from investment in operations = -$195,000,000

Learn more about this topic:

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Using the Statement of Cash Flows for Decision Making

from Accounting 101: Financial Accounting

Chapter 12 / Lesson 5
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