Cash flow is net earnings (income) plus depreciation and other non-cash items.

CF = Income + depreciation

Therefore

Income = CF - depreciation

Depreciation is a negative amount. I won't get into the debit/credit explanation, because that gets pretty confusing for non-accountants, but the general gist of it in laymans' terms is that when you buy an asset at a point in time and it is useful over many periods, it is "depreciated" on a regular basis over time, rather than recognized as an immediate expense.

For example, you buy a production plant. Let's say it is the Great Divide plant at Connacher, and let's pretend it cost $250m. The effect on cash is a $250m outflow in the year of purchase. However, that doesn't make your company any more profitable. Let's pretend the accountants decided that the plant was going to be used for 25 years, and they then decide that the expense of having the plant is $10m per year for those 25 years. This is oversimplied - in real life the CRA has lots of rules to dictate how assets are depreciated, and they don't mesh completely with the various GAAP methods of valuation, because there are lots of theoretical approaches.

Anyway, cash flow from the plant is -$250m the first year, then $0 for subsequent years. Net income, however, is -$10m per year for the next 25 years.

Essentially, what is happening with Connacher is that their quarterly income was $47.8m, but they probably purchased assets that quarter worth $34.0m. Actually, they probably purchased assets for more than $34.0m but there was probably also a counter-balance from depreciation, which is a non-cash expense on the IS. So in a continuation of this hypothetical situation, they may have had $47.8m income, which included $10.0m depreciation, but purchased $44.0m in assets.

47.8m income means 57.8m income if you ignore depreciation. 57.8m would therefore be your cash flow BEFORE spending money on assets. Then spend 44.0m on assets, and your cash of 57.8m drops down to 13.8m.

Very simplified, but hopefully this makes sense. Check out cash flow descriptions on the internet for greater detail. I'll dig up a link now, just a sec ...

http://www.investopedia.com/articles/01/110701.asp