Answer: 370

## Explanation To calculate cash flow from operating activities using the indirect method, we start with net income and make adjustments for non-cash items and changes in working capital. **Starting with net income:** €300 million **Add back non-cash expenses:** - Depreciation expense: +€35 million **Adjust for changes in working capital:** 1. **Increase in inventory** (€20 million): This represents cash outflow (purchasing inventory), so we **subtract** €20 million 2. **Decrease in accounts receivable** (€30 million): This means customers paid their bills, resulting in cash inflow, so we **add** €30 million 3. **Increase in accounts payable** (€25 million): This means the company delayed payments to suppliers, resulting in cash conservation, so we **add** €25 million **Calculation:** ``` Net income: 300 + Depreciation: 35 - Increase in inventory: 20 + Decrease in accounts receivable: 30 + Increase in accounts payable: 25 = 300 + 35 - 20 + 30 + 25 = 370 ``` **Therefore, cash flow from operating activities = €370 million** **Key points to remember:** - **Depreciation**: Non-cash expense, always added back - **Inventory increase**: Cash outflow (subtract) - **Accounts receivable decrease**: Cash inflow (add) - **Accounts payable increase**: Cash inflow (add) The opposite adjustments would apply for: - Inventory decrease (add) - Accounts receivable increase (subtract) - Accounts payable decrease (subtract)

Author: LeetQuiz .