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Cash flows from operating activitiesnet loss

In a recent year, J. C. Penney Company, Inc. (JCP) reported a net loss of $268 million from operations. However, on its statement of cash flows, it reported $428 million of net cash flows from operating activities.

The contradiction between the loss and positive cash flows is that depreciation is an expense in determining net income, but it does not result in a cash fill in the blank 1 of 2

inflowoutflow

. Thus, depreciation is fill in the blank 2 of 2

added back tosubtracted from

the net loss in order to determine net cash flow from operations.