Ramakrishnan Inc. Reported 2018 net income of $40 million and depreciation of $
ID: 2813500 • Letter: R
Question
Ramakrishnan Inc. Reported 2018 net income of $40 million and depreciation of $ 2,900,000. The top part of Ramakrishnan Inc's 2018 and 2017 balance sheet is listed below(in millionso f dollars).
2018 2017
Current assets:
Cash and marketable securities $45 $16
Accounts receivable: 85 82
Inventory: 161 124
Total: $291 $222
2018 2017
Current liabilities:
Accrued wages and taxes $ 28 $ 25
Accounts payable 89 85
Total: $202 $190
a. Calculate 2018 net cash flow from operating activities for Ramakrishnan, Inc. (enter your answer in dollars not in million).
Net cash value.....................
2018 2017
Current assets:
Cash and marketable securities $45 $16
Accounts receivable: 85 82
Inventory: 161 124
Total: $291 $222
Explanation / Answer
Current assets: ($ million)
2018
2017
Cash and marketable securities
45
16
Accounts receivable
85
82
Inventory
161
124
Total Current Assets
291
222
Current liabilities: ($ million)
Current liabilities:
2018
2017
Accrued wages and taxes
28
25
Accounts payable
89
85
Total Current Liabilities
117
110
Total net working capital = Current assets – Current liabilities ($million)
2018
2017
Net working capital
291 – 117 = 174
222-110 = 112
Change in net working capital =
174 - 112= 62
Therefore, cash flow = Net income + depreciation – Change in net working capital
= 40 + 2.9 – 62
= $ -19.1 million
= $ -19100000
2018
2017
Cash and marketable securities
45
16
Accounts receivable
85
82
Inventory
161
124
Total Current Assets
291
222
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