Calculate firm cash flow from operating activities

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Questions -

Q1. What is liquidity and why it is important?

Q2. Company J shows the following information on its 2020 income statement:

Sales $200,000

Costs $110,000

Depreciation $9,000

Interest $14,000

a. The company's tax rate is 40%. If net working capital decreased by $20,000 during the year, calculate firm's cash flow from operating activities.

b. In addition, you are told that the company's cash flow to bondholders and cash flow to shareholders were $9,000 and $4,200, respectively. During 2020, the net capital spending was $40,000. What was the increase or decrease in cash during 2020? Hint: You have two formulas for cash flow from asset (CFFA).

Reference no: EM133118025

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