a) Note that net income in the current year was
only $17,523 compared to prior-year income of $838,955, but cash
flow from operations was $236,480 in the current year and a
negative $700,957 in the prior year. Explain the causes of this
apparent paradox. (10 points)

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Question: A) Note that net income in the current year was only $17,523 compared to prior-year income of $83…
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(b) Using the information provided by the
Statement of Cash Flows, specify two questions that you would ask
management if you were a financial analyst attempting to issue a
buy / sell recommendation to clients. Explain why you would ask
each question. (10 points)

Question: A) Note that net income in the current year wasonly $17,523 compared to prior-year income of $83...

Show transcribed image text Prior Year Current Year Cash flows from operating activities 17523 838,955 Net Income Adjustments to reconcile net income to net cash provided by operating activities (69,524) (146,590) Deferred income taxes s 316,416 181,348 Depreciation and amortization changes in assets and liabilities S (25,947) (38,267) Accounts receivable, trade (1,599,014) (1,289,293) Inventories (444,794) (113,205) Prepaid and other current assets (83,044) Deposits and other current assets (24.240) (284,567) 2,017,059 Accounts payable 61,321 170,755 Accrued expenses Accrued interest payable, debentures (58,219) Other (8,960) Income taxes payable 117,810 Net cash provided by (used for) 236,480 1700,957) operating activities (2,012,892) (4,422,953) Net cash used for investing activities (315,353) 9,685,435 Net cash (used for) provided by financing activities (2,181,765) 4561,525 Net change in cash and cash equivalents Other information: 4,055,465 is 1.995,600 Current liabilities 4,620,085 Total liabilities 2,184,386 Net sales 20,560,586 17,025,856

Prior Year Current Year Cash flows from operating activities 17523 838,955 Net Income Adjustments to reconcile net income to net cash provided by operating activities (69,524) (146,590) Deferred income taxes s 316,416 181,348 Depreciation and amortization changes in assets and liabilities S (25,947) (38,267) Accounts receivable, trade (1,599,014) (1,289,293) Inventories (444,794) (113,205) Prepaid and other current assets (83,044) Deposits and other current assets (24.240) (284,567) 2,017,059 Accounts payable 61,321 170,755 Accrued expenses Accrued interest payable, debentures (58,219) Other (8,960) Income taxes payable 117,810 Net cash provided by (used for) 236,480 1700,957) operating activities (2,012,892) (4,422,953) Net cash used for investing activities (315,353) 9,685,435 Net cash (used for) provided by financing activities (2,181,765) 4561,525 Net change in cash and cash equivalents Other information: 4,055,465 is 1.995,600 Current liabilities 4,620,085 Total liabilities 2,184,386 Net sales 20,560,586 17,025,856

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