Question: Refer back to the information given for E12 10 plus the

Refer back to the information given for E12-10, plus the following summarized income statement for Pizza International, Inc. (in millions):
Revenues ............... $136,500
Cost of Sales ............. 45,500
Gross Profit .............. 91,000
Salary Expense ............. 56,835
Depreciation ............ 33,305
Other Expenses ........ 7,781
Net Loss before Income Tax Expense ... (6,921)
Income Tax Expense ........ 2,561
Net Loss ............. $ (9,482)

Required:
1. Based on this information, compute cash flow from operating activities using the direct method. Assume that Prepaid Expenses and Accrued Liabilities relate to other expenses.
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 financial analysts?


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  • CreatedFebruary 27, 2015
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