The 2008 comparative balance sheet and income statement of A. Karev Medical Supplies follow on the next page.

A. Karev had no noncash investing and financing transactions during 2008. During the year, A. Karev made no sales of land or equipment, no issuance of notes payable, no retirement of stock, and no treasury stock transactions.

Requirements

1. Prepare the 2008 statement of cash flows, formatting operating activities by the indirect method.

2. How will what you learned in this problem help you evaluate an investment?