The Following Information Relates to a Manufacturing Firm for the Current

Essay

The following information relates to a manufacturing firm for the current year. The corporation president is interested in knowing how much cash was provided by earnings. She has heard that net operating cash flow can be different from earnings. $$\begin{array} { | l | l | } \hline \text { Net income } & \$ 10,000 \\\hline \text { Depreciation expense } & 50,000 \\\hline \text { Net increase in current as sets (noncash) } & 30,000 \\\hline \text { Net increase in current liabilities } & 60,000 \\\hline \text { Proceeds trom sale of land } & 100,000 \\\hline \text { Cash dividend payments } & 40,000 \\\hline\end{array}$$ Receipt of dividends from investments (this amount is included in net income) 20,000
(a) Compute net operating cash flow using the indirect method.
(b) Given your answer in (a), which measure is a better one for use in evaluating this company, net income or net operating cash flow?