re: Help with 10-Q Interpretation

Calculate the cash-flow based and balance-sheet based accrual ratios on a four-quarter rolling basis going back eight quarters or so and see if there's been any deterioration in either. There could be some seasonality in the business that isn't reflected equally on the income statement and cash flow statement. There could also be the revenue recongition issue I mentioned earlier, i.e. consider Amazon prime. You pay $79 per year but the service is delivered to you throughout the year. The $79 is recognized instantly on Amazon's cash flow statement as a cash inflow, but revenue recognition rules likely require the $79 to be recognized in 4 increments of $19.75 ($79/4) on the income statement since the service is delivered throughout the year. So you'd get some mismatch between the two statements, but this would be captured (in part) if you look at things on a rolling basis.