Calculating and interpreting cash flow from operations. The following items appear in the financial statements of Bamberger Enterprises, a firm offering IT services for Sarbanes- Oxley compliance, for a year (amounts in thousands):
|
Sales
|
$ 14,600
|
|
Depreciation Expense
|
(210)
|
|
Income Taxes
|
(200)
|
|
Other Expenses
|
(13,900)
|
|
Net Income
|
$ 290
|
The changes in the current asset and current liability accounts were as follows:
|
Accounts Receivable
|
$780
|
Decrease
|
|
Inventories
|
80
|
Decrease
|
|
Prepayments
|
100
|
Decrease
|
|
Accounts Payable
|
90
|
Increase
|
|
Other Current Liabilities
|
240
|
Decrease
|
a. Compute the amount of cash flow from operations.
b. Comment on the major reasons why cash flow from operations exceeds net income.