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?
A) The company's operating income declined.
B) The company's expenditures on fixed assets declined.
C) The company's cost of goods sold increased.
D) The company's depreciation and amortization expenses declined.
E) The company's interest expense increased.

Question

Quizplus · Accepted Answer

A decline in depreciation and amortization expenses would increase net income (since these are non-cash expenses) but would not affect cash flow, potentially leading to a situation where net income rises while cash flow from operations declines.

Aubey Aircraft Recently Announced That Its Net Income Increased Sharply