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The following data relate to Austin Corporation for last year:
Net income
$237
Net increase in all current assets except cash
$47
Net decrease in current liabilities
$27
Cash dividends paid on common stock
$36
Gain on sale of investments
$11
Depreciation expense
$13
What is the net cash provided by operating activities for last year on the
statement of cash flows for Austin Corporation?
Enter your answer as either a positive or negative number, do not include a dollar sign.
ANSWER:
Depreciation is a non-cash item, so we add it back to net income.
A gain on the sale of investments is subtracted since it increases net income but doesn't generate operating cash flow.
239−47=192
Net decrease in current liabilities = $27 (a decrease in liabilities is also a reduction in cash flow).