Dansko Integrated had Net Income for 2017 of $7,800,000. The firm invested $4,00

ID: 1171802 • Letter: D

Question

Dansko Integrated had Net Income for 2017 of $7,800,000. The firm invested $4,000,000 in manufacturing equipment during 2016 but made no additional capital investments in 2017. The equipment is being depreciated over five years using straight-line depreciation, starting in 2016. Assuming no other adjustments to cash flow than those mentioned here, create a statement of cash flows for 2017 with amounts in thousands. What is the Net Cash Flow in 2017? Please specify your answer in the same units as the statement of cash flows.

Explanation / Answer

DANSKO INTEGRATED

Statement of Cash Flows

For the year ended 2017

Particulars

Amount [ $ in Thousands ]

Net Income for the year

7,800

Add Back : Depreciation

800

Net Cash Flow in 2017

8,600

*Depreciation under straight Line Method

= [ Cost of the Equipment – Salvage Value ] / Useful Life

= [ $4,000,000 - $0 ] / 5 Year

= $800,000 per year