Aubey Aircraft recently announced that its net income increased sharply from the
ID: 2649560 • Letter: A
Question
Aubey Aircraft recently announced that its net income increased sharply from the previous year, yet its net cash flow from operations declined. Which of the following could explain this performance?
The company's operating income declined.
The company's expenditures on fixed assets declined.
The company's cost of goods sold increased.
The company's depreciation and amortization expenses declined.
The company's interest expense increased.
1.The company's operating income declined.
2.The company's expenditures on fixed assets declined.
3.The company's cost of goods sold increased.
4.The company's depreciation and amortization expenses declined.
5.The company's interest expense increased.
Explanation / Answer
Answer:
The reason that net income has increased but cash flow from operating has declined can be a decrease in non cash expense. Here non cash expense is depreciation and amortization.
Hence option 4 is correct .
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