Prepare a memo explaining how net income could be positive and operating cash flows negative.

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Words: 130
Pages: 1
Subject: Uncategorized

Although net income was $5 million, cash flow from operating activities was a negative $5 million. This just didn’t make any sense to your boss.
Required:
Prepare a memo explaining how net income could be positive and operating cash flows negative. Include in your report a determination of operating cash flows of negative $5 million using the indirect method.

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