Description
Read and complete case study 10-10, "Eat at My Restaurant" in your text. Address the following elements, which are also required elements at the end of the case study:
- Comment on the difference between net cash provided by operating activities and net income. Speculate on which number is likely to be the better indicator of long-term profitability.
- Comment on the data reviewed for each firm.
- Do any of these firms appear to have a cash flow problem?
Your answers should be in an essay form with an introduction and conclusion; ensure you are addressing each element clearly and thoroughly, following these guidelines:
- Requirement (a) of the problem should be answered in general terms; you do not need to consider the 3 firms in the case. However, you do need to make a choice and rationalize that choice.
- When addressing requirement (b), you should make AT LEAST 4 observations on each firm, focusing on the cash flow ratios provided.
- All information should be considered when answering requirement (c). Even if you don't think any one company is “in trouble," you should still choose a company and support your choice.
Your submitted paper should be at least 2-3 pages long and written
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Explanation & Answer
Attached.
Running Head: CASE STUDY
1
Case Study
Student’s Name
Institution of Affiliation
Course
Date
CASE STUDY
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The Distinction between Net Income and the Net Cash from Operating Activities
Yum Brands Inc. realized $1.9 billion in terms of operating activities, a figure that was
higher than its net income in the same year that stood at $1.17 billion. This was the same case in
the year 2009 where the cash from operating activities amounting to $1.4 billion was higher than
the net income the company received that stood at $1.08 billion. Panera Bread Company also had
its cash provided by operating activities in both 2010 and 2009 higher than its net income in the
two years (Weil, Schipper & Francis, 2014). In 2009, the cash from operating activities was $237
and $214 million respectively while net income was $111 million and $86 million respectively.
The trend replicated itself in the data of Starbuck, where the cash from operating
activities for 2010 and 2009 was $1.7 billion and $1.3 billion, remaining higher than the net
income which stood at $948 million and $391 million in the two years. The main reason behin...
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