Returning to your friend Ben and his family's boogie board company, Ben is also worried that the CFO is stealing cash. He just heard the CFO saying the company is having to watch cash really closely due to their factory expansion last year which was mostly internally financed. However, Ben knows that the factory expansion was mostly capital items that are now being depreciated. When he checked the cash flow statement, he sees that depreciation has gone up from $700,000 a year to $15,700,000. This is clearly listed as adding cash in the operating section, so he can't figure out why there would be a problem. He has asked you to help explain this to his family board so they can call the police. What would you tell Ben?

Answer rating: 100% (QA)

Based on the information provided it does not appear that the increase in depreciation from 700000 t... View the full answer