New World Aviation's financial statements show that its net income increased significantly compared to the prior year, but net cash flow from operations declined.

New World Aviation's financial statements show that its net income increased significantly compared to the prior year, but net cash flow from operations declined. What might explain this result?

Operating income declined
Cost of goods sold increased
Interest expense increased
Depreciation expense declined significantly
Expenditures on fixed assets declined

Solutions

Expert Solution

option D: Since depreciation is added back to calculate operating cashflows, if it reduce significantly the cashflow can decrease compared to previous year

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

Reconciling Net Income and Cash Flow from Operations Using FSET For fiscal year 2015, Beyer GMBH...

Reconciling Net Income and Cash Flow from Operations Using FSET For fiscal year 2015, Beyer GMBH had the following summary information available concerning its operating activities. The company had no investing or financing activities this year. 1. Sales of merchandise to customers on credit €507,400 2. Sales of merchandise to customers for cash 91,500 3. Cost of merchandise sold on credit 320,100 4. Cost of merchandise sold for cash 63,400 5. Purchases of merchandise from suppliers on credit 351,600 6....

Determining Net Income from Net Cash Flow from Operating Activities Curwen Inc. reported net cash flow...

Determining Net Income from Net Cash Flow from Operating Activities Curwen Inc. reported net cash flow from operating activities of $193,000 on its statement of cash flows for the year ended December 31. The following information was reported in the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method: Decrease in income taxes payable $3,700 Decrease in inventories 9,300 Depreciation 14,300 Gain on sale of investments 6,400 Increase in accounts payable 2,600 Increase...

Determine earnings before interest and taxes, net income, and also the cash flow from operations for...

Determine earnings before interest and taxes, net income, and also the cash flow from operations for the following firm: $500,000 sales, $10,000 cash dividends, $300,000 cost of goods sold, $20,000 administrative expense, $20,000 depreciation expense, $40,000 interest expense, $10,000 purchase of productive equipment, no changes in working capital, and a tax rate of 35%.

Determining Net Income from Net Cash Flow from Operating Activities Sanhueza, Inc., reported a net cash...

Determining Net Income from Net Cash Flow from Operating Activities Sanhueza, Inc., reported a net cash flow from operating activities of $159,500 on its statement of cash flows for the year ended December 31, 2016. The following information was reported in the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method: Decrease in income taxes payable $3,400 Decrease in inventories 8,500 Depreciation 13,100 Gain on sale of investments 5,900 Increase in accounts payable...

What would happen to net income and cash flow if depreciation were increased by $1 million?

Butterfly Tractors had $14 million in sales last year. Cost of goods sold was $8.00 million, depreciation expense was $2 million, interest payment on outstanding debt was $1 million, and the firm’s tax rate was 35%.What would happen to net income and cash flow if depreciation were increased by $1 million? (Enter your numeric answers in millions rounded to 2 decimal places. Select "unaffected" if the results do not affect the balance.)

By how much did the firm’s net income exceed its free cash flow? Please show work...

By how much did the firm’s net income exceed its free cash flow? Please show work step by step if you hand write if you calculate using excel please reveal formulas so I can learn the necessary step when using excel. Target recently reported $9,250 of sales $5,750 of oprating costs other than depreciation and $700 of depreciation. zero $0.00 amoritization $3,200 of outstanding bonds that carry a 5% interest rate federal-plus-state income tax rate was 35% In order to...

In its financial statements WalkerCo is reporting net income of $296. Its tax rate for the...

In its financial statements WalkerCo is reporting net income of $296. Its tax rate for the year was 39%. Total assets at the beginning of the year was $2,832 and at the end of the year $3,281. In the footnotes it is reported that the LIFO reserve at the beginning of the year was $465 and at the end of the year $216. If the company had used the FIFO inventory costing method, what would it have reported as its...

Consider you have prepared Pro-forma income statements of a new venture that show a net income...

Consider you have prepared Pro-forma income statements of a new venture that show a net income of PKR 50,000, PKR 100,000, and PKR 150,000 for the first three years of starting the business. You are excited to see a positive cash inflow of PKR 300,000 for the first three years. However, your classmate with business majors in finance has highlighted that you may not have PKR 300,000 in cash, although your Pro-forma income statements show that you will earn that...

ABC Company is preparing its 2018 financial statements. Income from Continuing Operations (ICO) for 2018 was determined...

ABC Company is preparing its 2018 financial statements. Income from Continuing Operations (ICO) for 2018 was determined to be $1,800,000, but upon further review, ABC's accountant is not certain this number is accurate. ABC has a corporate tax rate of 30%. Additionally, the company reports one year of financial data on the face of the financial statements. Use the following information to determine the adjustments, if any, to correctly report Income From Continuing Operations. 1. During 2018, ABC experienced a labor...

Cash flow from assets. Use the data from the following financial statements in the popup window,...

Cash flow from assets. Use the data from the following financial statements in the popup window, LOADING... . The company paid interest expense of $ 17 comma 500$17,500 for 20172017 and had an overall tax rate of 40 %40% for 20172017. Find the cash flow from assets for 20172017, and break it into its three parts: operating cash flow, capital spending, and change in net working capital. The operating cash flow is $nothing. Partial Income Statement Year Ending 2017 Sales...

Subjects