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Series 79: Collection, Analysis & Evaluation of Data
Series 79 practice questionmediumCash Flow Analysis

A company has net income of $40 million, depreciation of $10 million, and an increase in accounts receivable of $5 million year-over-year. What is the cash provided by operating activities, assuming all other items remain unchanged?

  1. A$55 million
  2. B$45 million✓ Correct answer
  3. C$35 million
  4. D$65 million
Explanation

Why B$45 million

Cash flow from operations = Net income + depreciation - increase in accounts receivable = $40m + $10m - $5m = $45m. $55m ignores AR, $35m omits depreciation.

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