BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

Solutions

Chapter
Section
BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Cash flows from operating activities

On its income Statement for j recent year, American Airlines Group, Inc., the parent company of American Airlines, reported a net loss of $1,834 million from operations. On its statement of cash flows, it reported $675 million of cash flows from operating activities.

Explain this apparent contradiction between the loss and the positive cash flows.

To determine

Statement of cash flows:

It is one of the financial statement that shows the cash, and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing activities of a company.

Cash flows from operating activities:

These refer to the cash received or cash paid in day-to-day operating activities of a company.  In this direct method, cash flow from operating activities is computed by using all cash receipts, and cash payments during the year.

To explain: The apparent contradiction between the loss, and the positive cash flows.

Explanation

The apparent contradiction between the loss, and the positive cash flows is explained as follows:

With the net loss reported on the income statement some of the items are need to be added in order to convert the net loss which has occurred in accrual basis to the cash basis.

Cash flows from operating activities are as follows:

Incorporation A
Cash Flows from Operating Activities
(Selected from Statement of Cash Flows) (in millions)
Cash flows from operating activities:
Net income (loss) $ (1,834)
Adjustments to reconcile net income (loss) to net cash flowprovided by operating activities:
Depreciation and amortization 1,020
Special items, noncash 95
Pension ...

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

How might technology shape business report formats and their delivery in the future?

Essentials of Business Communication (MindTap Course List)

Using the partial work sheet provided below, prepare the adjusting entries for merchandise inventory.

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)

COST OF COMMON EQUITY Percy Motors has a target capital structure of 40% debt and 60% common equity, with no pr...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)