Sheffield Company Financial Report: Unraveling the Numbers

What was Sheffield Company's net income for the year ending 12/31/25?

How was the net cash provided by operating activities calculated based on the given data?

Sheffield Company's Net Income:

Sheffield Company reported a net income of $478,000 for the year ending 12/31/25.

Calculation of Net Cash Provided by Operating Activities:

The net cash provided by operating activities for Sheffield Company is calculated by starting with net income and adjusting for non-cash expenses and subtracting non-operating incomes, resulting in $531,800.

Sheffield Company's net income for the year ending 12/31/25 was $478,000, as reported in their financial statement. This figure represents the company's total earnings after deducting all expenses.

To calculate the net cash provided by operating activities, we need to adjust the net income by adding back non-cash expenses and subtracting non-operating incomes. In this case, the calculation involved adding back depreciation expense, amortization of a patent, and amortization of bond discount. Additionally, income from an investment in the common stock of Grouper Inc. accounted for under the equity method was subtracted from the net income.

Dividends paid by Sheffield Company during the year are not included in the operating activities calculation as they are considered a financing activity rather than an operational one.

By performing the necessary adjustments to the net income figure and following the formula, we arrived at a net cash provided by operating activities of $531,800. This amount reflects the cash flow generated by Sheffield Company's core business operations.

Understanding the components that contribute to the calculation of net cash provided by operating activities is crucial for evaluating a company's financial performance and liquidity position. It provides insights into the cash flow dynamics and efficiency of the business operations.