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Some of the questions below may reference the following set of financial statements: Acme...

Question:

Some of the questions below may reference the following set of financial statements:

Acme Building Products Income Statement ($ millions)

2013
Net Sales $ 55,415
Cost of goods sold 36,408
Depraciation 11,611
Earnings before intrest & taxes 7,396
Interest expense 1,282
Taxable Income 6,114
Less: Taxes 2,140
Net Income (35% )$ 3,974

Acme Building Products Balance Sheet( $ millions)

2013 2014 2013 2014
Cash $ 668 897 Accounts Payable $ 1,694 $ 1,932
Acc'ts Receivable 1,611 1,327 Notes Payable 2,500
Inventory 3,848 4,947 Total 4,194 1,932
Total 6,127 7,171 Long-term Debt 9,800 11,650
Net Fixed Assets 17,489 17,107 Common Stock* 7,500 7,500
Retained Earnings 2,122 3,196
Total Assets $23,616 $24,278 Total $23,616 $24,278

Using Acme's financials above, what is Acme's 2013 operating cash flow?

a. $14,267

b. $13,396

c. $15,007

d. $11,374

e. $16,867

Operating Cash Flow

Operating Cash Flow is a major source of the company's cash generated from the normal course of business plus changes in the current assets and current liabilities. Operating cash flow always starts with the net income followed by non-cash expenses (depreciation and amortization) and last are the working capital items.

Answer and Explanation:

The correct choice is c. $15,007

Net income 3,974
Depreciation 11,611
Decrease in Accounts Receivable 284
Increase in Inventory (1,099)
Increase in Accounts Payable 238
Operating Cash Flow 15,007

Learn more about this topic:

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Operating Cash Flow: Definition & Examples

from Finance 101: Principles of Finance

Chapter 10 / Lesson 4
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