Rowan, Inc.'s, income statement is shown below. Based on this income statement and the other information provided, calculate the net cash provided by operations using the indirect method.
Rowan, Inc.
Income Statement
For Year Ended December 31, 20X1
Sales Cost of goods sold Grost profit Operating expenses Wages and salaries expense Rent expense Depreciation expense Other operating expenses Income from operations Gain on sale of equipment Income before income taxes Income taxes expense Net income $44,00016,00030,00018,000$248,000116,000$132,000108,000$24,000$26,000$50,000$17,500$32,500
Additional information: Increase in accounts receivable Increase in accounts payable Increase in income taxes payable Decrease in prepaid expenses Decrease in merchandise inventory Decrease in long-term notes payable $4,00016,00030010,00014,00020,000
Definitions:
Net Operating Income
The profit generated from a business's regular operational activities, excluding expenses and taxes.
Contribution Margin Ratio
The percentage of each sales dollar remaining after variable costs have been deducted, indicating the portion available to cover fixed costs and generate profit.
Net Operating Income
Gross income after operational expenses are deducted but before income taxes and interest are calculated.
Cost-Volume-Profit Graph
A visual representation that shows the relationship between a company's costs, its production volume, and the profits generated at different levels of output.