Prime Contractors (Prime) is a privately owned company that contracts with the U.S. government to provide various services under multiyear (usually five-year) contracts. Its principal services are as follows:
Refuse: Picks up and disposes of refuse from military bases.
Shuttle: Provides parking and shuttle services on government-sponsored research campuses.
Animal Care: Provides feeding and veterinary care for animals used in research at government-sponsored facilities.

Required
a. What evidence do you see in Exhibit 3.37 of Prime’s strategic shift from refuse services to animal care services?
b. Discuss how Prime’s net income could decline between Year 6 and Year 8 while its cash flow from operations increased.
c. Discuss how Prime’s net income could increase between Year 8 and Year 10 while its cash flow from operations decreased.
d. What is the likely reason that the adjustment for deferred income taxes when converting net income to cash flow from operations was an addition in Year 6 to Year 8 but a subtraction in Year 9 and Year 10?
e. Explain why gains on the disposition of fixed assets appear as a subtraction from net income when cash flow from operations is computed.
f. Prime increased its long-term debt net in Year 6 and Year 7 but decreased it net in Year 8 to Year 10. What is the likely reason for this shift in financing?