A new study finds a troubling gap between cash flow from operations and operating income last year for the 87 nonfinancial members of the S&P 100. Conducted by the Financial Analysis Lab at the Georgia Institute of Technology's DuPree College of Management, the study finds that the difference between operating cash flow and income last year for the median company in the group was almost 12 percent greater than average for the three years that ended in 2002.

Such a wide gap reflects a heavy dependence on improvements in working capital and other boosts to cash flow that aren't sustainable, simply because such gains aren't generated by the growth of a company's underlying business operations.

"At least some of the recent improvement in cash flow is not earnings produced," said Charles Mulford, an accounting professor who oversees the Georgia Tech Lab. "That kind of growth is not sustainable."

The biggest gaps: (1) Sears (2) Pharmacia (3) Bristol-Myers Squibb (4) H.J. Heinz (5) Amgen (6) Hewlett-Packard (7) Microsoft (8) Allegheny Technologies (9) Lucent Technologies (10) AOL Time Warner

The smallest gaps: (1) Oracle (2) Entergy (3) General Electric (4) Home Depot (5) Nextel (6) Gillette (7) Norfolk Southern (8) Burlington Northern Santa Fe (9) Anheuser-Busch (10) Minnesota Mining and Mfg.

"Mind the Gap" offers complete coverage of this study, available at http://www.cfo.com/Article?article=1152