Concept #1: Indirect Method Summary

Example #1: Indirect Method (1)

Example #2: Indirect Method (2)

Example #3: Indirect Method (3)

Practice: A company reported net income of $250,000. Depreciation and amortization totaled $120,000. In total, Current assets excluding cash increased by $25,000 and current liabilities increased by 16,000. The company also had a gain on the sale of equipment of $4,000. Using the indirect method, what are cash flows from operating activities?

Practice: A company had net income of $240,000. Depreciation expense was $36,000. During the year, the accounts receivable and Inventory increased $12,000 and $25,000, respectively. Accrued expenses and prepaid expenses decreased by $3,000 and $14,000, respectively. There was also a gain on the sale of equipment of $4,000. How much cash was provided by operating activities?