Answer:
Net Cash flows from operating activities is $67,150.
Explanation:
Operating cash flows are the cash flows from the operations of the business like sales, purchases, expenses etc.
Net income $12,750
Add: Depreciation expense $32,600
Add: Decrease in accounts receivable $21,500
Less: Increase in inventory ($18,300)
Add: Increase in accounts payable $19,800
Less: Decrease in interest payable ($1,200)
Net Cash flows from operating activities $67,150
Non cash items is added back to net profit as it does not involve any cash transaction.
Decrease in receivable means there are more receipts from customer than sales made on credit.
Increase in inventory means more inventory is purchased or manufactured than sold in the period. More inventory held the cost which need to be recovered from sale.
Increase in payable means there is less payment made to the suppliers and others than purchase made or expenses incurred during the period and vice versa for decrease in interest payable.
