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The cash outflows are subtracted from the cash inflows to calculate the net cash flow from operating activities, before the net cash from investing and financing activities are included to get the net cash increase or decrease in the company for that period of time.

Net cash from operating activities: $337,500

Income before income taxes: $700,000

Cash paid to vendors: (525,000)

Cash receipt from customers: $1,500,000

How do you calculate cash provided by operating activities?

Cash Flow from Operations

Cash Flow from Operations = Net Income + Non-Cash Items + Changes in Working Capital.

  • Step 1: Start calculating operating cash flow by taking net income from the income statement.
  • Step 2: Add back all non-cash items.
  • Step 3: Adjust for changes in working capital.

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