Chapter 12, Problem 12.22E

(Chapter Supplement A) Reporting and Interpreting Cash Flows from Operating Activities from an Analyst’s Perspective (Direct Method)

Refer to the information for Rodriguez Company in Exercise 12-8.

Required:

1. 1. Present the operating activities section of the statement of cash flows for Rodriguez Company using the direct method. Assume that other accrued liabilities relate to other expenses on the income statement.
2. 2. What were the major reasons that Rodriguez was able to report a net loss but positive cash flow from operations? Why are the reasons for the difference between cash flow from operations and net income important to financial analysts?