Deckers Outdoor Corporation designs and markets footwear under the brand names Teva, UGG, and others. Assume that two recent years produced a combination of declining sales revenue and net income, culminating in a net income of only $5,710 (all numbers in thousands). Yet Deckers was able to report positive cash flows from operations in the current year of $198,677. Contributing to that positive cash flow was the change in accounts receivable. The current and prior year balance sheets reported the following: (dollars in thousands) Current Year Previous Year $ 158,643 $ 160,154 Trade accounts receivable, net of allowances Required:
1. On the current year's cash flow statement (indirect method), how would the change in accounts receivable affect cash flow from operations?
2-a. How does declining sales revenue often lead to declining accounts receivable?
2-b. How does declining sales revenue often lead to cash collections from customers being higher than sales revenue?