1. Based on the information in Exhibit 1 for Pinkerly Inc., a fictitious company, what are the total adjustments that the company would make to net income in order to derive operating cash flow?

Exhibit 1: Pinkerly Inc.

Year Ended Income statement item 12/31/2018 Net income USD30 million Depreciation USD7 million Balance sheet item 12/31/2017 12/31/2018 Change Accounts receivable USD15 million USD30 million USD15 million Inventory USD16 million USD13 million (USD3 million)

Accounts payable USD10 million USD20 million USD10 million A. Add USD5 million B. Add USD21 million C. Subtract USD9 million