To determine the total cash from operating activities, you start with the net income and make adjustments for non-cash expenses and changes in working capital accounts. Here's the step-by-step process:
1. Start with Net Income:
[tex]\[ \text{Net Income} = 620 \][/tex]
2. Add back non-cash expenses (like depreciation):
[tex]\[ \text{Depreciation} = 240 \][/tex]
Since depreciation is a non-cash charge, it is added back to the net income.
[tex]\[ 620 + 240 = 860 \][/tex]
3. Adjust for changes in current assets and liabilities:
- Increase in receivables represents cash not yet collected, which needs to be subtracted:
[tex]\[ \text{Increase in Receivables} = 210 \][/tex]
[tex]\[ 860 - 210 = 650 \][/tex]
- Increase in inventory represents cash spent on purchasing inventory, which needs to be subtracted:
[tex]\[ \text{Increase in Inventory} = 90 \][/tex]
[tex]\[ 650 - 90 = 560 \][/tex]
- Increase in payables represents expenses incurred but not yet paid, which increases cash:
[tex]\[ \text{Increase in Payables} = 160 \][/tex]
[tex]\[ 560 + 160 = 720 \][/tex]
So, the total cash from operating activities is:
[tex]\[ 720 \][/tex]
Therefore, based on the given information, the total cash from operating activities is 720.
