Refer back to the information given for E12 10, plus the following summarized income statement for Pizza International, Inc (in millions) Required 1 Based on this information, compute cash flow from operating activities using the direct method Assume that Prepaid Expenses and Accrued Liabilities re...

Use the Direct Method to Calculate Cash Flow from Operating Activities Cash received from clients le ...

Refer back to the information given for E12-10, plus the following summarized income statement for Pizza International,

Question:

Refer back to the information given for E12-10, plus the following summarized income statement for Pizza International, Inc. (in millions):

Revenues Cost of Sales Gross Profit Salary and Wages Expense Depreciation Office Expenses Net Loss before

Required:
1. Based on this information, compute cash flow from operating activities using the direct method. Assume that Prepaid Expenses and Accrued Liabilities relate to office expenses.
2. What was the primary reason that Pizza International was able to report positive cash flow from operations despite having a net loss?

Data From E12-10:

Pizza International, Inc., operates 700 family restaurants around the world. The company’s annual report contained the following information (in thousands):

Net loss Depreciation Increase in receivables Decrease in inventory Increase in prepaid expenses Operating