00:01
Now in the question we have to calculate the net cash flow from the operating activity so we have made this format now first of all we will be taking the net income during the year so the net income during the year this is $225 ,000 so we will be writing this in the final amount column that is $225 ,000 is the net income for the year now we will be doing adjustment for non -cash expenses that is depreciation it has to be added back so add depreciation expense on plant and that is given to be 34 ,600 now finally we don't have any other adjustment regarding the non -cash expenses so we will be doing what we will be moving this 34 ,600 to the final amount column now, after the adjustment for depreciation, we will be seen for the changes in working capital.
01:27
So any addition in the current asset is going to be subtracted because it is involving outflow of cash.
01:34
And similarly, any decrease in the current liability will also result to outflow of cash.
01:44
So that should be also subtracted and vice versa.
01:47
So changes in working capital.
01:52
So for this we have been given that there has been increase in account receivable.
01:58
So this increase in account receivable will cause this will cause a outflow of cash.
02:04
So this has to be decreased subtracted.
02:06
So increase in accounts receivable and the increment was of 2100.
02:25
Similarly there has been increase in inventory.
02:29
So this has to be subtracted.
02:31
So increase in inventory and that is of $8 ,200.
02:42
Now, there has been also decrease in prepaid expenses.
02:49
So prepaid expenses is what is a current asset...