Computing Net Cash Flow from Operating Activities}

An analysis of the statement of financial position and statement of earnings of Sanchez Company revealed the following: net income, \(\$ 12,750\); depreciation expense, \(\$ 32,600\); decrease in accounts receivable, \(\$ 21,500\); increase in inventory, \(\$ 18,300\); increase in accounts payable, \(\$ 19,800\); and decrease in interest payable, \(\$ 1,200\).

\section*{Required:}

1. Compute the net cash flows from operating activities using the indirect method.

2. Calculate the quality of earnings ratio.

\section*{Cornerstone Exercise