The following information was taken from the 2014 financial statements of Eiger Corporation, a maker of equipment for mountain and rock climbers:
Net income ............. $100,000
Depreciation ............ 30,000
Increase (decrease) in
Accounts receivable .......... 110,000
Inventories ............ (50,000)
Prepaid expenses ........... 15,000
Accounts payable ......... (150,000)
Salaries payable ............ 15,000
Other current liabilities ....... (70,000)
Required:
1. Calculate Eiger’s cash flow from operating activities for 2014.
2. Explain the reasons for the difference between the firm’s net income and its cash flow from operating activities in 2014.