Why cant we pay our shareholders a dividend? shouts your new boss at Polar Opposites. This income
Question:
“Why can’t we pay our shareholders a dividend?” shouts your new boss at Polar Opposites. “This income statement you prepared for me says we earned $5 million in our first year!” You recently prepared the financial statements below.
Although net income was $5 million, cash flow from operating activities was a negative $5 million. This just didn’t make any sense to your boss.
Required:
Prepare a memo explaining how net income could be positive and operating cash flows negative. Include in your report a determination of operating cash flows of negative $5 million using the indirect method.
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Memo To Bosss name From Your name Subject Explanation of Positive Net Income and Negative Operating Cash Flows at Polar Opposites Dear Bosss name I un...View the full answer
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