Refer to Exhibit 6.35 for Fierce Fighters Corporation, which shows excerpts from its Statements of Cash Flows, with cash flow from operations presented with the indirect method, for three recent years. We use these years to illustrate a period of successively decreasing cash flows from operations. The columns labeled Change and shaded purple do not appear in the original.
a. Using Exhibit 6.35, write a short (no more than 50 words) explanation of why Fierce
Fighters€™ cash flow from operations declined by about 20% per year between 2011 and 2012 and then again between 2012 and 2013. If you cannot explain, then suggest why that might be.
Exhibit 6.35

b. Now refer to Exhibit 6.36 for Fierce Fighters, which shows excerpts from its Statements of Cash Flows, with cash flow from operations presented with the direct method, for the same three years as in part a. Write a short (no more than 50 words) explanation of why Fierce Fighter€™s cash flow from operations declined by about 20% per year between 2011 and 2012 and then again between 2012 and 2013. If you cannot explain, then suggest why that might be.
c. Which method of presenting cash flow from operations do you find easier tointerpret?

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Fierce Fighters Corporation Data Taken from Consolidated Statements of Cash Flows (Shaded Columns Showing Changes Do Not Appear in Original) (Problem 43) (all amounts in millions of US$) EXHIBIT 6.36 Direct Method (Without Reconciliation of Net Income to Cash Flow from Operations) Years ended December 31 Cash Provided by Operating Activities Sources of Cash 2013 2012 2011 Change Cash Received from Customers Collections from Customers on Long-Term Contracts Other Collections Less: Cash Paid to Suppliers and Employees 1,664 4,145 13,251(6,001) (192) 3,102 11,148 (253) 1,691 (447) 465 (235) 1,426 1,438 7,003 7.450 (.250) 715) Net Cash Margin Cash Contribution Margin Percentage Proceeds from Litigation Settlement Interest Received 1,191 7.0% 14.1% 15.6% S 220 17 23 24 5 1,283 220 17 15 10 1,233 18 (60) Income Tax Refunds Received Other Cash Receipts Cash Provided by Opeictivities 75 14 50 (293)1,526 Other Operating Uses of Cash Interest Paid Income Taxes Paid Other Cash Payments Cash Used in Operating Activities 168 $ 165 57 (51) (28) (17) 96)319 216 85 18 126 5 466 817 243 223 Net Cash Provided by Operating Activities (193) 1010 (197) 1,207 The changes are from right to left, from 2011 to 2012 and from 2012 to 2013. Each number in a change column is the difference: number to the left of the change minus the number to the right of the change.