Refer to the following summarized income statement and additional selected information for Trumasburg, Inc.,

Required:
1. Based on this information, compute cash flow from operating activities using the direct method Assume that prepaid expenses and accrued liabilities related to other expense.
2. What were the major reasons that Trumansburg was able to report a net but positive cash flow from operations? Why are the reasons for the difference between cash flows from operations and net income important to financialanalysts?

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Income Statement Revenues Cost of sales $150,800 55,500 95,300 55,400 33,305 9,600 (3,005) 1,500 S (4,505) Gross margin Depreciation and amortization Other expense Net loss before tax Income tax expense Net loss Other information: Decrease in receivables Decrease in inventories Increase in prepaid expenses Increase in accounts payable Decrease in accrued liabilities Increase in income taxes payable $ 800 230 1,500 1,750 1,280