Pizza International, Inc. operates 940 family restaurants around the world. The

Question

Pizza International, Inc. operates 940 family restaurants around the world. The company's annual report contained the following information (in millions) Operating Activities S (9.476) 33,311 176 649 676 2,288 731 1,873 12.703 29.085 Net Loss Increase in Receivables Decrease in Inventory Increase in Prepaid Expenses Decrease in Accounts Payable Decrease in Accrued Liabilities Increase in Income Taxes Payable Payments on Notes Payable Cash Paid for Equipment The following summarized income statement for Pizza Intemational, Inc. (in millions): Revenues Cost of Sales $137,100 45,800 Gross Profit Salary and Wages Expense Depreciation Other Expenses 91,300 56,865 33,311 7.787 Net Loss before Income Tax Expense Income Tax Expense 6.663) 2,813 Net Loss S (9,476) Required: 1. Based on this information, compute cash flow from operating activities using the direct method. Assume that Prepaid Expenses and Accrued Liabilities relate to other expenses. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions. (i.e., 10,000,000 should be entered as 10).) PIZZA INTERNATIONAL, Cash Flow from Operating Activities-Direct Method

Explanation / Answer

The primary reason for the net loss was the depreciation expense and it does not affect cash flow from operating activities.

Pizza International, INC. CASH FLOW FROM OPERATING ACTIVITIES- DIRECT METHOD Cash receipts from customers 136924 Cash paid to suppliers -14991 Cash paid to employees -56865 Cash paid for expenses -7787 Income tax paid -2813 Cash flow from operating activities 54468

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