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Sample Question Preview
A company reports the following information: Net income of £500,000, depreciation expense of £80,000, increase in accounts receivable of £30,000, and decrease in inventory of £20,000. Using the indirect method, what is the company's cash flow from operating activities?
Explanation:
Cash flow from operations = Net income + Depreciation - Increase in receivables + Decrease in inventory = £500,000 + £80,000 - £30,000 + £20,000 = £570,000
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