All Wired is a marketing services firm that creates advertising copy for clients and places the advertising in various mass media. Accounts receivable represents amounts owed by clients, and accounts payable represent amounts payable to various media. All Wired has purchased marketing services firms in recent years. The data for All Wired for the last three years appear as follows (amounts in millions):

Required:

(a) Prepare a comparative statement of cash flows for All Wired 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 operations and the pattern of cash flows from operating, investing, and financing activities during the three years.

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2016 2015 2014 Net Income $499 $363 $279 Depreciation and Amortization Expense 226 196 164 Increase (Decrease) in Accounts Receivable 514 648 238 Increase (Decrease) in Inventories 98 13 35 Increase (Decrease) in Prepayments 125 (10) 64 Increase (Decrease) in Accounts Payable 277 786 330 Increase (Decrease) in Other Current Liabilities 420 278 70 Acquisition of Property, Plant, and Equipment 150 130 115 Acquisition of Investments in Securities 885 643 469 (noncurrent) Dividends paid 122 104 88 Long-term debt issued 599 83 208 Common stock Issued (Reacquired) (187) (252) 42