The information below was collected from the forecasting process to forecast cash flow for next month for a small healthcare provider.

Using the indirect method $($Net Income $-$ Changes in Assets $+$ Changes in Liabilities $=$ Net Cash Flow$)$ create a forecast for cash flow.

$1.$ Net income is forecasted to be $$1,000,000($Revenue of $$2,000,000$ and costs of $$1,000,000)$

$2.$ For forecasting purposes it usually assumed that $80\%$ of revenue will go to insurance and will not be collected for at least $2$ months and thus $80\%$ will got to accounts receivable where the remaining $20\%$ will be collected upfront as cash.

$3.$ It expected that $$1,000,000$ in accounts receivable will be collected next month that is from previous months sales.

$3.$ Depreciation expense is forecasted to be $$100,000$

$4.$ Due to having more customers, the healthcare provider needs to increase inventory by $$150,000$

$5.$ Payments of $$500,000$ due to suppliers will be due next month but you will aslo add $$700,000$ to accounts payable from additional purchases.

Directions: Fill in the form below using the information above. Please note that the net cash flow will calculate automatically as you enter dollar amounts into each cell. Enter amounts in whole dollars. The cells are already formatted for that so you can just type in the number.

Line Item Answer $($Each answer is worth $11$ points.$)$

Net income$--------------------------------------------------------->$

Minus Change in Accounts Receivable$------------------------->$

Add back Depreciation Expense $($non cash flow expense$)-->$

Minus change in Inventory$--------------------------------------->$

Plus change in Accounts Payable $------------------------------->$

$=$Net Cash Flow $---------------------------------------------------->$ $$0\mathrm{.}00$