Cash flow problem

[jonathankyim]

Help! I have NO idea where the answer is getting all the numbers from…

10. Given the following information for a company, its CFO is closest to:

Net income

$2,050
Depreciation
$345
Interest expense
$150
Tax rate
30%
Net capital expenditure
$1,500
Debt repaid
$20
Working capital investment
$325
Funds borrowed

$1,500

1. $1,100
2. $1,250
3. $1,050

Answer: A
CFO = 1,000 – 85 – 45 + 90 + 35 – 105 + 85 +125 = 1,100

 

[AndrewUNH]

pretty sure you have to start w/ NI, the numbers in your answer don’t seem to match up w/ the problem…

 

[mohammad. belaal]

In Indirect method we start from NI and add all non cash charges to get Funds from Operation then adjust them to changes in working capital to get operating cash flow. The numbers which you’ve used seem different.
CFO = NI + Depreciation +/- Other non cash items - Increase in Working Capital
Increase in Working Capital = Increase in non cash current assets - Increase in non debt current liabilities.

 

[jonathankyim]

AndrewUNH wrote:
pretty sure you have to start w/ NI, the numbers in your answer don’t seem to match up w/ the problem…
OK I thought I was doing something wrong, but it seems the solution was wack!