Model Answer (with Excel-like Steps):
Step 1. Compute Net Income:
= 500 – 80 – 100
Net Income = 320
Step 2. Cash from Operations:
Adjust for non‐cash items and working capital changes:
+ Net Income: 320
+ Depreciation: 20
– Increase in Accounts Receivable: (180)
– Increase in Inventory: (150)
– Decrease in Accounts Payable: (120)
= Net Cash from Operations: –110
Step 3. Cash from Investing:
– Increase in Net Fixed Assets: (120)
= Net Cash from Investing: –120
Step 4. Cash from Financing:
– Decrease in Common Stock: (80)
– Dividend: (60)
= Net Cash from Financing: –140
Step 5. Total Change in Cash:
–110 – 120 – 140 = –370
Cash at Beginning: 800
Cash at End: 800 – 370 = 430