FirstRate Company and subsidiaries
Quality of Earnings Analysis
(U.S. dollars in thousands)
	Fiscal year ended December 31,
	20X1	20X2	20X3	20X4	20X5 1
Net income	$23,900	$24,900	$22,000	$18,100	Answer
Adjustments to reconcile net income to OCF
Depreciation of property, plant, and equipment	10,500	11,200	11,700	12,000	Answer
Gain on disposal of equipment					Answer
Loss on sale of equipment	900				Answer
Changes in working capital accounts
Decrease (increase) in accounts receivable, net	(2,000)	(8,000)	(11,000)	(13,000)	Answer
Decrease (increase) in inventory	(4,400)	(14,000)	(14,900)	(17,700)	Answer
Increase (decrease) in accounts payable	2,200	11,100	10,100	15,400	Answer
Increase (decrease) in accrued income tax. payable	(300)	100	(400)	(400)	Answer
Increase (decrease) in accrued interest payable	100	200	400	600	Answer
Net cash provided by (used in) operating activities	$30,900	$25,500	$17,900	$15,000	Answer
Ratio of OCF-to-Net income	129.28%	102.41%	81.36%	82.87%	Answer
Cumulative ratio of OCF-to-Net income	Answer	Answer	Answer	Answer	Answer
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¹ For this assignment, the 20X5 currency amounts come from the SCF in the Topic 3 (Financial Accounting) Assignment you previously completed. Before completing THIS assignment, be sure you have made any changes or corrections indicated by your instructor/facilitator on the SCF workbook tab of your returned Topic 3 assignment to the extent that they relate to the operating cash flow (OCF) section of your SCF. (Recall that, OCF is the first section of a SCF, preceding the "investing" CF section of the SCF. In case you remain uncertain about this, net cash provided by operating activities in 20X5 should be $1,300 in your finalized SCF for 20X5.)