Question

How does Apple's cash from operating activities differ from the income from operations on the income statement? What are the major sources for this difference? Which would you find more valuable in deciding whether to invest in the company or not and why?

Answer 1

Cash Flow from Operating Activities: In This activity we can show the changes of all operating activities like changed in account receivable, Account payable, Stock, Depreciation., So by operating activities we know is the our increase or decrease in cash flow in this activities. Means we are give the effect of the changes in working capital of the company and effects of non cash expenses and effect of the accrued liability will also effect this.

Income From Operation: This will shows the overall profit of the company, in this statement we know the company’s overall sales, expenses gross and net revenue Etc., in this statement there is no bifurcation of cash and non cash expenses . once expenses incurred in the period it will shown In the financial statement.

So there is always difference ini the cash flow from operating activities and cash flow from the operation

So the major sourcrs of difference is changes in working capital and non cash expenses .

Income from operations is the more valuable becasue it shows the total sales, expenses revenue and other income . With this we can calculate the lot of the ratio analysis like GP ratio, net profit ratio and others.