Usher Sports Shop had cash flows from investing activities of −$4,454,000 and cash flows from financing activities of −$5,925,000. The balance in the firm’s cash account was $1,624,000 at the beginning of the year and $1,760,000 at year-end. Calculate Usher Sports Shop’s cash flow from operations.
To calculate Usher Sports Shop's cash flow from operations, we need to subtract the cash flows from investing activities and cash flows from financing activities from the change in cash balance.
Change in cash balance = $1,760,000 - $1,624,000 = $136,000
Cash flow from operations = Change in cash balance - Cash flows from investing activities - Cash flows from financing activities
= $136,000 - (-$4,454,000) - (-$5,925,000)
= $136,000 + $4,454,000 - $5,925,000
= -$1,335,000
Therefore, Usher Sports Shop's cash flow from operations is -$1,335,000.
To calculate Usher Sports Shop's cash flow from operations, we need to use the indirect method.
The formula for cash flow from operations is:
Cash Flow from Operations = Net Income + Non-cash Expenses + Changes in Working Capital
First, let's gather the necessary information:
Cash at the beginning of the year: $1,624,000
Cash at year-end: $1,760,000
Cash flows from investing activities: -$4,454,000
Cash flows from financing activities: -$5,925,000
Next, we need to calculate the changes in working capital. Unfortunately, we don't have information about working capital in the given question. Working capital is calculated as:
Working Capital = Current Assets - Current Liabilities
Without this information, we can't accurately calculate the cash flow from operations using the given data.
To calculate Usher Sports Shop's cash flow from operations, we need to use the formula:
Cash Flow from Operations = Change in Cash + Cash Flows from Investing Activities + Cash Flows from Financing Activities
First, let's calculate the change in cash:
Change in Cash = Ending Cash - Beginning Cash
Change in Cash = $1,760,000 - $1,624,000
Change in Cash = $136,000
Next, we plug in the values we have into the formula:
Cash Flow from Operations = $136,000 + (-$4,454,000) + (-$5,925,000)
Cash Flow from Operations = -$10,243,000
Therefore, Usher Sports Shop's cash flow from operations is -$10,243,000.