LO 16.1Is it possible for a company to have significant net income in the same time period that net cash flows are negative? Explain.
LO 16.2Describe three examples of operating activities, and identify whether each of them represents cash collected or cash spent.
LO 16.2Describe three examples of financing activities, and identify whether each of them represents cash collected or cash spent.
LO 16.3Why is depreciation an addition in the operating section of the statement of cash flows, when prepared by the indirect method?
LO 16.3If a company reports a gain/(loss) from the sale of assets, as part of the net income on the income statement, and the net book value of those assets on the date of the sale is known, can the amount of the cash proceeds from the sale be determined? If so, how?
LO 16.4Is there any significance that can be attributed to whether net cash flows are generated from operating activities, versus investing and/or financing activities? Explain.
LO 16.4Would there ever be activities that relate to operating, investing, or financing activities that would not be reported in their respective sections of the statement of cash flows? Explain. If a company had any such activities, how would they be reported in the financial statements, if at all?
LO 16.5What insight does the calculation of free cash flow provide about the company’s cash flow position?