KMBSolution7 - Kimberly-Clark Corporation (KMB) Solution to...

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Kimberly-Clark Corporation (KMB) Solution to Continuing Case, Chapter 7 THE TREASURER’S RULE It is best to lay out the reformulated statement first before setting up the treasurer’s rule. The statement below is a reformulated cash flow statement that follows the accounting equation, C – I = d + F As you see below, the statement is reformulated to show free cash flow (C – I), and the total for free cash flow equals the total financing flows (d + F). Go back to the Continuing Case for Chapter 4 to remind yourself how the GAAP cash flow statement is modified to calculate free cash flow. Net interest after tax ($101.4 million) is added to the reported free cash flow and reclassified as a payment to debtholders (a financing flow rather than an operating flow). (The after-tax net interest payment is calculated under the statement below.) Net investments in interest-bearing securities and deposits (-$3.6 million, a net liquidation) are reclassified from investment in operations to financing flows. You see these adjustments in the statement below. And
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This note was uploaded on 10/07/2010 for the course ECTCS ec12947322 taught by Professor Johnathayeri during the Spring '10 term at Life.

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KMBSolution7 - Kimberly-Clark Corporation (KMB) Solution to...

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