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15 December, 19:05

JBS Inc. recently reported net income of $4,750 and depreciation of $885. How much was its net cash provided (used) by operations, assuming it had no amortization expense, added $200 to inventories, sold none of its fixed assets, and had a $200 increase in accounts payable

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  1. 15 December, 22:53
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    net cash provided is $5,635

    Explanation:

    Amount ($)

    Net Income 4,750

    Depreciation 885

    Change in inventory (200)

    Change in accounts payable 200

    Net cash flows from Operation 5,635

    The depreciation is a none cash item that was initially deducted to get the net income, hence it is added back in the cash flows statement.

    An increase in inventory represents an outflow of cash hence the negative value. The increase in trade payable is an increase in a liability representing an inflow of cash hence it is positive.
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