Calculating and interpreting cash flow from operations. Selected data for a Finnish cellular phone manufacturer appear below (amounts in millions of euros):
|
2008 |
2007 |
2006 |
2005 |
|
|
Net Income (Loss) |
€3,847 |
€2,542 |
€1,689 |
€1,032 |
|
Depreciation Expense |
||||
|
Increase (Decrease) in |
1,009 |
665 |
509 |
465 |
|
Accounts Receivable |
2,304 |
982 |
1,573 |
272 |
|
Inventories |
422 |
362 |
103 |
121 |
|
Prepayments |
(49) |
33 |
17 |
(77) |
|
Accounts Payable |
458 |
312 |
140 |
90 |
|
Other Current Liabilities |
923 |
867 |
1,049 |
450 |
a. Compute the amount of cash flow from operations for each of the four years using the indirect method.
b. Discuss briefly the most important reasons why cash flow from operations differs from net income or net loss for each year.