Selected summary information is presented below for two companies.
|
Fasani Enterprises |
Thunderbird Corporation |
|||
|
(In millions) |
2005 |
2004 |
2005 |
2004 |
|
Total assets |
$7,446 |
$6,512 |
$8,452 |
$7,786 |
|
Net sales |
6,812 |
5,746 |
8,910 |
7,388 |
|
Net income |
414 |
366 |
312 |
816 |
|
Depreciation and amortization |
366 |
314 |
268 |
244 |
|
Decrease (increase) in receivables |
12 |
8 |
326 |
262 |
|
Decrease (increase) in inventories |
174 |
116 |
84 |
32 |
|
Increases (decrease) in payables |
264 |
124 |
114 |
62 |
|
Cash flow from operations |
$1,230 |
$912 |
$224 |
$704 |
a. Calculate the ratios of cash flow from operations to net income and to total assets.
b. Evaluate the success of each company at using assets to generate cash flow from operations.
c. What are the major causes of the difference between net income and cash flow for the two companies?