Comment on the major reasons why cash flow from operations exceeds net income. 1 answer below »

Calculating and interpreting cash flow from operations. The following items appear in the financial statements of Bamberger Enterprises, a firm offering IT services for Sarbanes- Oxley compliance, for a year (amounts in thousands):

Sales

$ 14,600

Depreciation Expense

(210)

Income Taxes

(200)

Other Expenses

(13,900)

Net Income

$ 290

The changes in the current asset and current liability accounts were as follows:

Accounts Receivable

$780

Decrease

Inventories

80

Decrease

Prepayments

100

Decrease

Accounts Payable

90

Increase

Other Current Liabilities

240

Decrease

a. Compute the amount of cash flow from operations.

b. Comment on the major reasons why cash flow from operations exceeds net income.

 

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