Question: Presented in the exhibit for Case 1 (see text) is a graph of accounting income, cash flows from operations, and working capital flows from operations

Presented in the exhibit for Case 1 (see text) is a graph of accounting income, cash flows from operations, and working capital flows from operations for W. T. Grant Company, a retailer that filed for bankruptcy in 1976. As late as 1973, the company’s stock was selling for 20 times earnings. What does the chart indicate concerning the usefulness of income, cash, and funds flows? What could explain the significant differences between working capital flows and cash flows?

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