In reviewing the financial statements of the Graceland Rock Company, you note that net income increased while

Question:

In reviewing the of the Graceland Rock Company, you note that net income increased while cash flow from operations decreased from 2013 to 2014.
a. Explain how net income could increase for Graceland Rock Company while cash flow from operations decreased. Give some illustrative examples.
b. Explain why cash flow from operations may be a good indicator of a firm’s “ quality of earnings.”
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...