Interpreting Cash Flows The operating activities section of Bernstein Company’s cash flow statement is reported below.
|
2004 |
2003 |
2002 |
|
|
Net income |
$391 |
$455 |
$467 |
|
Depreciation and amortization |
258 |
247 |
223 |
|
Special and nonrecurring items |
3 |
0 |
0 |
|
Changes in current assets and liabilities: |
|||
|
Accounts receivable |
220 |
102 |
66 |
|
Inventories |
112 |
73 |
45 |
|
Accounts payable |
15 |
22 |
19 |
|
Income taxes |
6 |
7 |
30 |
|
Other accrued expenses |
17 |
26 |
11 |
|
Cash flow provided by operations |
$318 |
$524 |
$639 |
Required
What does this information reveal about why cash flow from operations has decreased by 50% over the three year period? Be specific and explain the basis for your conclusions.