ch 12 q 3

Cash Flow from Operating Activities Indirect Method) The following information was obtained from Melville company's comparative balance sheets: End Benning of Year of Year Cash 118.000 39,000 Accounts receivable 50.000 95.000 Inventory 35.000 000 Prent 000 2.000 Long termes 21000 30.000 Plasses T40 000 105,000 Accumulated depreciation (42,000 132.000) Accounts payable 2000 22.000 Income tax payable 1000 8.000 Common stock 127,000 92.000 Heted earnings 106.000 91.000 Capital expenditures 15200 Assume that Melville Company's income statement showed depreciation expense of $10,000 again on sale of investments of $7,000, and a net income of $60.000. (a) Calculate the cash flow from operating activities using the indirect method and (b) compute Melvilles operating cash-low-to-capital-expenditures ratio. Use negative signs with cash outflow answers. Assume that Melville Company's income statement showed depreciation expense of $10,000 again on sale of investments of $7.000 and a net income of 560.000. Calculate the cash flow from operating activities using the indirect method and (b) compute Melvilles operating-cash-flow-to-capital expenditures ratio a. Use negative signs with cash outflow answers. Cash Flow from Operating Activities Net Income 55,000 Add(deduct) items to convert net income to cash basis Depreciation 13.000 x Gain on sale of investments 225.000 Accounts Receivable Increase 9,000 X Inventory Increase (6.000) Prepaid Rent Decrease 2,000 Accounts Payable Increase 14,0001 Income Tax Payable Decrease 12.000) Cash Provided by Operating Activities $ 48.000 b. Operating cash flow.to capital expenditures ratio (Round answer to two decimal points) 19.000