Calculate the end of the year cash balance based on the information below: Beginning of the year cash balance 1,600
Revenue 1,200
Net income 450
Depreciation 100
Negative changes in operating assets and liabilities 60
Acquisitions of PP 300
Dividends paid in the current year 110
Increase in long-term debt 500

$2,180

Explanation:

Net income is already derived from revenue so adding revenue would be double counting.

Depreciation is a non cash expense so should be added back to cash holdings.

Negative changes in operating assets and liabilities reduces cash.

Acquisitions of Property and Plants reduces cash

Dividends also reduce cash

Increase in debt increases cash.

Cash balance is therefore:

= Beginning of year cash + Net income + Depreciation + Increase in long-term debt - Negative changes in operating assets and liabilities - Acquisitions of PP - Dividends paid in current year

= 1,600 + 450 + 100 + 500 - 60 - 300 - 110

= $2,180

u = 30

continuing your method

= +

subtract from both sides

= - thus

= -

= ⇒ u = 30

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