Calculating and interpreting cash flow Marketing Communications is a marketing services firm that creates advertising copy for clients and places the advertising in television, magazines, and other media. Accounts receivable represent amounts owed by clients, and accounts payable represent amounts payable to various media. Marketing Communications has purchased other marketing services firms in recent years. Selected data for Marketing Communications for three recent years appear next (amounts in millions):
a. Prepare a comparative statement of cash flows for Marketing Communications for the three years. Use the indirect method of computing cash flow from operations.
b. Discuss the relation between net income and cash flow from operation and the pattern of cash flows from operating, investing, and financing activities during the threeyears.

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2008 2007 2006 S 499 S 363 Net Income $279 Depreciation and Amortization Expense 226 196 164 Increase (Decrease) in Accounts Receivable Increase (Decrease) in Inventories Increase (Decrease) in Prepayments. 514 648 238 98 13 35 (10) 125 64 Increase (Decrease) in Accounts Payable Increase (Decrease) in Other Current Liabilities Acquisition of Property, Plant, and Equipment. Acquisition of Investments in Securities (noncurrent). 277 786 330 420 278 70 150 130 115 B85 643 469 Dividends Paid . 122 104 88 Long-Term Debt Issued Common Stock Issued (Reacquired) 599 83 208 (187) (252) 42 ...