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?