CFAI Mock Exam PM Session Q49. (Computation of CFO) 2008, statements, principles, accounting, 2007

Spongebob

Assume U.S. GAAP (generally accepted accounting principles) applies unless otherwise noted.

The following information is from a company’s 2008 financial statements ($ millions):
Balances as of the year ended 31 December 2008 2007
Retained earnings 140 120
Accounts receivable 43 38
Inventory 48 45
Accounts payable 29 36

In 2008 the company declared and paid cash dividends of $5 million and recorded
depreciation expense in the amount of $25 million. The company’s 2008 cash
flow from operations ($ millions) is closest to:
A. 25.
B. 30.
C. 35.

kamara5

Answer is C.

20+5 (dividends paid) +25-5-3-7=35

Isn't Dividends Paid categorised under CFF? Why is this included in the computation of CFO?

smartpants

Should it be like as follow:

net income=25

Plus dep=25

minus ch.rec =5
minus ch.inv=3
plus ch.pay=7

CFO = 49

what about this?