: You are an accountant of a medium-sized manufacturing company. You prepared the income statement for 2018 that showed net income of $10 million and a statement of cash flows, using the indirect method, that showed cash flow from operating activities of negative $10 million. This just didn't make sense to your boss.

Prepare a memo explaining: 1. How net income could be positive and operating cash flows negative. Include in your report: 2. How operating cash flows using the indirect method is determined. 3. Whether or not switching to the direct method would change the amount of cash flow from operations.