E$6-26($Static$)$ Interpreting the Effects of Sales Declines and Changes in Receivables on Cash Flow from Operations LO$6-3$

Tupperware Brands Corporation is engaged in the marketing, manufacture, and sale of design$$centric preparation, storage and serving solutions for the kitchen and home and beauty products through international brands. Assume that two recent years produced a combination of declining sales revenue and net income, culminating in a net income of only $$12,400($all numbers in thousands$).$ Yet Tupperware was able to report positive cash flows from operations in the current year of $$87,400.$ Contributing to that positive cash flow was the change in accounts receivable. The current and prior years' balance sheets reported the following:

$($amounts in thousands$)$

Current Year Prior Year

Accounts receivable, net of allowances $ $110,700$ $ $144,700$

Required:

$1.$ On the current year's cash flow statement $($indirect method$),$ how would the change in accounts receivable affect cash flow from operations?

$2-$a$.$ How does declining sales revenue often lead to declining accounts receivable?

$2-$b$.$ How does declining sales revenue often lead to cash collections from customers being higher than sales revenue?