Pizza International, Inc., operates 700 family restaurants around the world. The companys annual report contained the following

Pizza International, Inc., operates 700 family restaurants around the world. The company’s annual report contained the following information (in thousands):

Required:
1. Based on this information, compute cash flow from operating activities using the indirect method.
2. What were the major reasons that Pizza International was able to report positive cash flow from operations despite having a net loss?
3. Of the potential causes of differences between cash flow from operations and net income, which are the most important to financialanalysts?

Transcribed Image Text:

Operating Activities Net loss Depreciation Increase in receivables Decrease in inventories Increase in prepaid expenses $(9,482) 33,305 170 643 664 Decrease in accounts payable Decrease in accrued liabilities Increase in income taxes payable Reduction of long-term debt Additions to equipment 2,282 719 1,861 12,691 29,073