In its 2018 Annual Report to Shareholders, Sisters Corporation included the following information on cash flow from operations:

Require:

9. Explain why Sisters Corporation subtracts equity income from its net income in its measurement of cash flows.

10. Did accounts receivable increase or decrease during 2018? Explain.

CONSOLIDATED STATEMENTS OF CASH FLOWS (in S thousands) 2018 2017 Operating activities: Net income Adjustments to reconcile to net cash provided S10,680$30,100 by operating activities: Depreciation and amortization Deferred income taxes Equity income 25,734 20,051 9,885 (486(864) ,156 Changes in operating assets and liabilities: Receivables Inventories Accounts payable and accrued expenses Prepaids and other, net 17,888 (33,018) 39,331 (10,173) (23,73713,515 10.913)5.893 Net Cash Provided by Operating Activities 63,653S35.389