Don’t quite get the part on why A “The company experienced more cash earnings than accounting earnings in 2010.” is the correct answer.
I do understand about the part on -ve accruals = +ve operating cash flows. But it does not seem the case when we look at the data in exhibit 1:
Operating CF: 2449 (2010), 3299 (2009)
Operating Income: 6986 (2010), 2694 (2009)
Cashflow seems to be decreasing compared to accounting income which is rising.作者: JoeyDVivre 时间: 2013-4-22 07:26
I think they’re basing the answer on the cash accrual ratio, which went down. With accrual ratios, the lower the better, the more cash,
