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STATEMENT OF CASH FLOWS:  REPORTING THE EFFECTS OF OPERATING, INVESTING, AND FINANCING ACTIVITIES ON CASH FLOWS   T4-X

using cash flow from operations in part to finance the purchases.  Sales increased 76.3 percent [= ($36,597/$20,758) – 1] between Year 2 and Year 3 while fixed assets increased 220.2 percent [= ($76,975/$24,039) – 1] between those years.  Sales increased 50.3 percent [= ($54,988/$36,597) – 1] between Year 3 and Year 4 while fixed assets increased 38.4 percent [= ($106,529/$76,975) – 1].  For the two years as a whole, sales increased 164.9 percent [= ($54,988/$20,758) – 1] while depreciable assets increased 343.2 percent [= ($106,529/$24,039) – 1].  Although these sales increases are substantial, they are significantly less than the increase in fixed assets.  Stretching creditors to purchase these fixed assets could jeopardize the availability of goods (for example, jet fuel) and services (pilots’ services) needed to remain in business.

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