A company purchases its inventory from suppliers on account. During the year, its inventory account increased by $16 million and its accounts payable to suppliers decreased by $4 million. If cost of goods sold was $500 million, its cash outflows to inventory suppliers totaled:

Question

Business

Hana

10 March, 03:41

A company purchases its inventory from suppliers on account. During the year, its inventory account increased by $16 million and its accounts payable to suppliers decreased by $4 million. If cost of goods sold was $500 million, its cash outflows to inventory suppliers totaled:

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Susannah · Answer 1

cash outflows to inventory suppliers totaled: $512 million

Explanation:

Calculation of Cash flows to inventory suppliers:

Cost of goods sold $500 million

Less decrease in Accounts payable ($4 million)

Add Increase in Inventory $16 million

Cash outflows to inventory suppliers $512 million