Prepare a memo explaining how net income could be positive and operating cash flows is negative. Include in your report the calculation of operating cash flows of negative $5 million using the indirect method. POLAR OPPOSITESIncome StatementFor the year ended December 31, 2018($ in millions)Net sales$65Cost of goods sold(35)Depreciation expense(4)Operating expenses(21)Net income$ 5POLAR OPPOSITESBalance SheetDecember 31, 2018($ in millions)Cash$1Accounts receivable (net)16Merchandise inventory14Machinery (net)44Total assets$75Accounts payable$7Accrued expenses payableNotes payable29Common stock25Retained earningsTotal liabilities and stockholders' equity$75

The cash flow from operating activities include the cash flow from day to day operating activities…

Prepare a memo explaining how net income could be positive and operating cash flows is negative. Include in your report the calculation of operating cash flows of negative $5 million using the indirect method.

Prepare a memo explaining how net income could be positive and operating cash flows is negative. Include in your report the calculation of operating cash flows of negative $5 million using the indirect method.

Fundamentals of Financial Management (MindTap Course List)

15th Edition

ISBN:9781337395250

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter4: Analysis Of Financial Statements

Section: Chapter Questions

Problem 24P: Income Statement for Year Ended December 31, 2018 (Millions of Dollars) Net sales 795.0 Cost of...

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