The CEO of Cassette Tape Manufacturers is pleased because the company's cash flows from operations exceed net income. He considers this a sign of success. Cassette Tape's statement of cash flows shows the following operating cash flows:

Required
Discuss whether the CEO should be pleased with the operating cash flows. Specifically, what items may indicate that Cassette Tape has a potential problem?

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Net income $ 94,350 Adjustments to reconcile net income to net cash provided by operating activities Increase in accounts receivable (32,284) (8,590) 48,300 Increase in inventory Increase in accounts payable Net cash provided by operating activities 7.426 S101,776