Chapter 11, Problem 66.2C

To determine

Operating Cash Flow means that cash flow which is from the business main activity. Like sale of goods and paid salary, factory rent.

Operating activity show that the inflow or outflow cash. Only that cash which is the main source of income and expense for the business.

To discuss:

Find net cash provided by operating activities for each company:

a) What amount is from the operating activity for the year-end of Company-A and Company-B?

b) What is the difference between the net income and net cash provided by the operating activity?

c) Comparing the net income to net cash provided by operating activity, can you draw any conclusion as to the quality of each company’s earnings?