Usefulness of operating cash flow data when large losses are reported

- Here are the income statement numbers for scenario three,…entered into the matrix.…Are these cash flow numbers? No.…The income statement is a measure of economic performance,…which is not necessarily the same as cash flow,…but we know that we can use the balance sheet numbers…to convert these income statement numbers…into cash flow numbers.…Here are the relevant balance sheet numbers…for the company in scenario C, as of the end of last year,…and as of the end of this year.…Now, there is something new in scenario C.…This company sold the building they share…and reported a large loss on the sale.…

As a result, the income statement shows a net loss,…instead of net income.…Let's review each adjustment necessary in the matrix…to convert the income statement numbers…into cash flow numbers.…With this loss, we need to be careful.…If not, there's a good possibility that we are going…to miss this one, so look at depreciation.…We add it back, because it's a non-cash item,…subtracted in the computation of net loss.…Accounts receivable, the increase…