Accounting data are used to analyze cash flows, and this analysis is critical for decision making. Consider the following case: J&H Corp. recently hired Jeffrey. His immediate mandate was to analyze the company. He has to submit a report on the company's operational efficiency and estimate potential investment in working capital. He has the income statement from last year and the following information from the company's financial reports as well as some industry averages. Last year, J&H Corp. reported a book value of $450 million in current assets, of which 10% is cash, 12% is short-term investments, and the rest is accounts receivable and inventory. The company reported $382.5 million of current liabilities including accounts payable and accruals. Interestingly, the company had no notes payable claims last year. There were no changes in the accounts payables during the reporting period. The company, however, invested heavily in plant and equipment to support its operations. It reported a book value of $720 million in long-term assets last year. Income Statement For the Year Ended on December 31 (Millions of dollars) J&H Corp. Industry Average Net sales $4,300 $5,375 Operating costs, except depreciation and amortization 3,440 4,300 Depreciation and amortization 172 215 Total operating costs 3,612 4.515