Step1: Cash from operations may be lower than reported net income during growth period, is due to cash paid for inventory and the amount expensed as cost of goods sold. Since the company plans increase in sales, the purchase of inventory increases. Step2: During the late maturity phase and during decline phase, the cash from investing often positive.
Work Step by Step
Step1: Therefore, in the growth phase, the company will expense less inventory on an accrual basis than it purchases on a cash basis. Step2: As the company sells off excess assets.