Interpreting the statement of cash flows Exhibit 5.37 presents statements of cash flows for Spokane Corporation, a forest products company, for three years from its past when it faced financial difficulty, which you can see by noting the pattern of losses increasing with time. The company has since reorganized and reported positive earnings.
a. Spokane Corporation operated at a net loss each year but generated positive cash flow from operations. Explain.
b. What is the likely explanation for the changes in Spokane Corporation€™s cash flow from investing activities during the three-war period?
c. What is the likely explanation for the changes in long-term financing during 2006 and2007?

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Spokane Corporation Statement of Cash Flows (all dollar amounts in millions) (Problem 43) EXHIBIT 5.37 2008 2007 2006 Operations S (77) $ (63) Net Income (Loss) S(154) ... Depreciation Other Addbacks (Subtractions) 236 268 266 ..... (56) (46) (3) (43) 41 (Increase) Decrease in Accounts Receivable (Increase) Decrease in Inventories Increase (Decrease) in Accounts Payable Increase (Decrease) in Other Current Liabitities Cash Flow from Operations. (68) (31) 55 15 (1) $ 131 50 $ 216 $66 Investing $ 24 Sale of Property, Plant, and Equipment Acquisition of Property, Plant, and Equipment Other Investing Transactions, Cash Flow from Investing. 5 171 (271) $ 202 (283) (222) (75) S(175) (31) $(112) S(189) Financing $ 27 5 (54) Increase (Decrease) in Short-Term Borrowing Increase in Long-Term Debt.. Increase in Preferred Stock.. Decrease in Long-Term Debt. $ 25 139 84 131 287 191 (116) (269) (164) Dividends (84) (67) (55) (5) 5 44 $ (2) Other Financing Transactions Cash Flow from Financing (2) S (34) $60 Change in Cash Cash, Beginning of Year Cash, End of Year 22 20 22 $ 22 $ 20 S 29