The April 16, 2004, edition of the Wall Street Journal contains an article by Jonathan Weil titled, “Outside Audit: ‘Cash Flow Never Lies’—Or Does It?”

Instructions Read the article and answer the following questions.

(a) According to the article, why do investors pay close attention to the statement of cash flows?

(b) In what section of the statement of cash flows are customer-related cash flows usually reported? In what section of the statement of cash flows are loans to other entities usually reported?

(c) In what section of the statement of cash flows does Ford Motor Co. report loans to customers? In what section of the statement of cash flows does Navistar report loans to customers? What implication does this have for cash flows from operations?

INTERPRETING FINANCIAL STATEMENTS