Question

How does net earnings compare with net cash provided by or Net cash used in operations

Answer 1

The net earnings of the year can be equated with the Net Cash provided by or used in operations :

Net Cash Provided by or used in Operations = Net Earnings + Non- cash Expenses + Changes in Working Capital

Thus, the net earnings can be compared with net cash provided by or net cash used in operations by adding the non-cash expenses like depreciation or amortisation expenses and adding the net cash used in increase in the working capital with the Net Earnings.

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