Refer back to the information given for Exercise 13.8 and the following summarized income statement for Sizzler International, Inc.:

Required: 1. Based on this information. compute cash flow from operating activities using the direct method. Assume that prepaid expenses and accrued liabilities relate to other expenses. 2. What were the major reasons that Sizzler was able to report a net loss but positive cash flow from operations? Why are the reasons for the difference between cash flow from operations and net in- come important to financial analysts?

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Revenues Cost of sales $136,500 45,500 Gross margin 91.000 Salary expense 56,835 Depreciation and amortization 33,305 Other expense 7.781 Net loss before tax (6.921) Income tax expense Net loss 2.561 $(9.482)