16.7

Cash flows from operating activities Selected data derived from the Income statement and balance sheet of National Beverage Co. for a recent year are as follows: Income statement data (in thousands) Net income $134,290 Loss on disposal of property (141) Depreciation expense 13,932 Other items involving noncash expense Balance sheet data (in thousands): Increase in accounts receivable 12,590 Increase in inventory 7,630 Increase in prepaid expenses 10,646 Increase in accounts payable and other current liabilities 16,653 This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. 727 Open spreadsheet a. Prepare the Cash Flows from (used for) Operating Activities section of the statement of cash flows, using the indirect method for National Beverage Co. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments. Enter the amounts in thousands of dollars, as shown above. National Beverage Co. Cash Flows from Operating Activities (in thousands) 2. Prepare the Cash Flows from (used for) Operating Activities section of the statement of cash flows, using the Indirect method for National Beverage Co. Use the mir sign to Indicate cash out flows, cash payments, decreases in cash, or any negative adjustments. Enter the amounts in thousands of dollars, as shown above National Beverage Co. Cash Flows from Operating Activities (In thousands) Cash flows from (used for) operating activities: Net Income 134,290 Adjustments to reconcile net income to net cash flows from (used for) operating activities: Depreciation expense 141 X Loss on disposal of property 13,932 X Other items involving noncash expense Changes in current operating assets and liabilities: Increase in accounts receivable -12,590 Increase in inventory -7,630 Increase in prepnd expenses -10,646 Increase in accounts payable and other current liabilities 16,653 Net cash flows from operating activities 134,877 727 b. The company has positive earnings and positive net cash flow from operating activities. The increase in accounts receivable indicates a(n) increase in sales. In addition, the company is using its cash to decrease its accounts payable balance, which indicates that the company's generating enough cash from operations to pay for its inventory in cash Overall, National leverage is doing well financially