Describe the organization of the statement of cash flows. And how do you compute net income? Solution The cash flow statement reports the company\'s major sources and uses of cash during a period of time. The Cash Flow Statement is organized into three major sections: Cash from Operating activities (transaction entered in determining net income), cash from investing activities (involves acqusition and sale of long-term assets) and cash from financing activities (borrowing or lending long term debt or capital). There can be one more activity i.e. Supplemental information such as interest paid, income taxes paid, and significant noncash exchanges. Net income relates to the above mentioned cash from operating activities. It can be computed Indirectly (using Nt income from profit & Loss and than excluding non cash and non operating transaction) or Directly (Cash received and paid in normal business activities)..

1. Describe the pattern of residuals in each plot. Is there any evidence that the linear regression
assumptions may be violated? Explain briefly.
Solution
From the plots we can observe that there is a randomnes in the residuals which indicates that
there is a decent fit of data
Suppose if there is any non random behaviour of residuals we can say that the fit is non linear
but here there is no such abnormality which indicates that the fit is good