Assessing the Quality of Reported Earnings Using Cash Flow Data. Below, you will find a graph of Enron's operating cash flows versus its net income in the years leading up to the company's downfall. You will notice that Enron's income differs quite a bit from its operating cash flows for every year in the chart.

What could account for the differences? Some users of financial statements use differences between net income and cash flows (particularly operating cash flows) as a rough indicator of how reliable net income is. What is your opinion of the reliability of Enron's income based on the chart below?

I Measuring Performance: Cash Flow and Net Income Below is the underlying data from Enron's financial statements as originally reported. The ratio of cash flow from operations to net income is at the bottom of the table. Does it seem plausible that the company can hav such a large increase in the ratio in 2000? I Measuring Performance: Cash Flow and Net Income Below is the underlying data from Enron's financial statements as originally reported. The ratio of cash flow from operations to net income is at the bottom of the table. Does it seem plausible that the company can hav such a large increase in the ratio in 2000