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?

Question

Quizplus · Accepted Answer

The increase in net income suggests that the company earned more revenue than the previous year. However, the decline in net cash flow from operations could be due to a decline in depreciation and amortization expenses. This is because depreciation and amortization expenses represent non-cash expenses, and a decline in these expenses would lead to less cash being generated from operations despite an increase in net income.

Aubey Aircraft Recently Announced That Its Net Income Increased Sharply