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Using the Indirect Method, Calculate the Amount of Cash Flows

question 78

Essay

Using the indirect method, calculate the amount of cash flows from operating activities from the following data:
 Net Earnings $275,000 Beginning trade receivables 43,000 Ending trade receivables 37,000 Beginning prepaid expenses 10,000 Ending prepaid expenses 3,000 Beginning trade payables 19,000 Ending trade payables 14,000 Depreciation expense 48,000 Dividends declared and paid 12,000\begin{array} { | l | r | } \hline \text { Net Earnings } & \$ 275,000 \\\hline \text { Beginning trade receivables } & 43,000 \\\hline \text { Ending trade receivables } & 37,000 \\\hline \text { Beginning prepaid expenses } & 10,000 \\\hline \text { Ending prepaid expenses } & 3,000 \\\hline \text { Beginning trade payables } & 19,000 \\\hline \text { Ending trade payables } & 14,000 \\\hline \text { Depreciation expense } & 48,000 \\\hline \text { Dividends declared and paid } & 12,000 \\\hline\end{array}

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Definitions:

Functional Strategy

A specific, detailed plan aimed at achieving objectives in a particular business area, supporting the overall business strategy.

Divisional Strategy

A strategic approach in which an organization is divided into semi-autonomous units, each focusing on a specific product line or market segment.

Corporate Strategy

The overall direction and scope of an organization over the long term, which achieves advantage in a changing environment through its configuration of resources.

Business Strategy

A plan of action designed to achieve a long-term or overall aim in the realm of commerce and management.

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