Calculating and interpreting cash flows. Amazon.com sells books over the Internet. The changes in its balance sheet accounts for two recent years appear below (amounts in thousands):

a. Prepare columnar work sheets for the statement of cash flows for Year 4 and Year 5. Amazon.com did not declare or pay dividends during either year.

b. Prepare a statement of cash flows for Year 4 and Year 5. The balance in cash was \(\$ 6,248\) at the end of Year 4 and \(\$ 109,809\) at the end of Year 5.

c. Discuss the relation between net income and cash flow from operations and the relation between cash flow from operating, investing, and financing activities during the two years.

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Cash.... Marketable Securities Inventories Year 4 Year 5 $5,252 Increase $103,561 Increase 15,256 Increase 554 Increase Prepayments .. 307 Increase Property, Plant, and Equipment (at cost) 1,360 Increase 8,400 Increase 2,977 Increase 15,283 Increase Accumulated Depreciation .... Accounts Payable-Merchandise Suppliers 286 Increase 2,753 Increase 4,742 Increase 29,845 Increase Other Current Liabilities .... 2,010 Increase Long-term Debt ... Common Stock Retained Earnings 8,201 Increase 5,777 Decrease 7,603 Increase 78,202 Increase 52,675 Increase 27,590 Decrease