CHAPTER13 - CHAPTER 13: STATEMENT OF CASH FLOWS 1. Why the...

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Unformatted text preview: CHAPTER 13: STATEMENT OF CASH FLOWS 1. Why the need for the Statement of Cash Flows? V~—-————J We,thij , 0km Row erM OPERATWNS leME grm’aMeN‘r J, Mum/1'9. lemurs w orem'l’wa Ao’fiwflcs Abomw/OMH mtg? \/ +er \NmME, -, RLVENUE; w expawgas Wfl—J MMWT Fob fubwfiwo‘ paw“, ycmrwmbe .. N91” [NUDME -. LENBNULE'C r emmmsas M 3%» UN WMMVTIONS, LgfiNATas &‘.M$CL£T10N 0F MNMT NOT Mumw QTATGHEN'T 9?- WM new; (mu FUQN LMM crammmg L {Uzi—LEUTS Wu INFWWS k WTr-LoWS + We}; 0N MTW C/HSVK \NPUDWS & WTF-WWL MUREW .. Rgpwurs 1’“qu 0F Mn \Nppows kOUKTF-LOWS W Ne-r MMEVANT \N HWWTIN“ m-rum VEKFOEMWCIE: 90. oA'NPrL‘lQTg Sum,» use TQM INLOMC STATEMENT & xmwmmfi' 09 mm Hows - MWNcwa’I’mM M1w£aN ° NI k .CPrSH FLOW PROM 9P5 mm M: ME]: 119 MTBc/‘r HAN‘FWLATNN 2. Classification of Typical Cash Inflows and Outflows Operating Cash inflows m-T. Lew N up From sales of goods or service ' From returns on loans (interesth and on equity securities dividendsxlL r Cash outflows )N “BEND; “DEN E) To suppliers for inventory. To employees for services. To government for taxes. To lenders for interesti’i. \N'f. h, i) To others for expenses. Investing Cash inflows From sale of property. plant. and equipment. From sale of debt or equity securities of other entitles. From collection of principal on loans to other entities. Cash outflows To purchase property, plant, and equipment. To purchase debt or equity securities of other entities. To make loans to other entities. Flnanclng Cash inflows From sale of equity securities. From issuance of debt (bonds and notes). Cash outflows H"! To stockholders as dividends. ' To redeem long-term debt or reacquire capital stock. *QIuIKM—CMWL) 9:6 \N FINHNQANQ {INT} MLOMUUA‘YIOM MINEEN: Ne’l Inn/ONE” N um How mar 67:? V olN‘f Ni" x L x Q. E“: KEN Income Statement Items Generally Long-Term Asset Items Generally Long-Term Liablllty and Equity Items FMM (9 PS 3. Two alternative formats for the Statement of Cash Flows a) Direct Method // EXPRESSO ROYALE / Statement of Cash Flows - For Year Ended December 31, 2009 Cash flows from operating activities Cash received from customers . . . . . . . . . . . . . . . . $391,000 Cash received as dividends . . . . . . . . . . . . . . . . . . 5,000 Cash paid for merchandise purchased . . . . . . . . . . (248,000) Cash paid to employees . . . . . . . . . . . . . . . . . . . . . (78,500) Cash paid for advertising . . . . . . . . . . . . . . . . . . . . (13,000) Cash paid for income taxes . . . . . . . . . . . . . . . . . . (18,500) Net cash provided by operating activities . . . . . . . Cash flows from investing activities Sale of investments . . . . . . . . . . . . . . . . . . . . . . . . 9,000 Purchase of plant assets . . . . . . . . . . . . . . . . . . . . (48,000) Net cash used by investing activities . . . . . . . . . . . Cash flows from financing activities issuance of common stock . . . . . . . . . . . . . . . . . . . 14,000 Payment of dividends . . . . . . . . . . . . . . . . . . . . . . . (17,000) Net cash used by financing activities . . . . . . . . . . . Net decrease in cash . . . . . . . . . . . . . . . . . . . . . . . . . Cash at beginning of year . . . . . . . . . . . . . . . . . . . . . Cash at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . (3.1 $ 38,000 (39,000) (3,000) (4,000) 12,000 m b) Indirect Method EXPR'E'sso novALE _ _ \ “if”; - ‘éi-SE‘St'atérrient of CasH'Flovv's';:,.:-I. ' 'ForYea'r Ended December 31, 2009 =1 - ' Net cash flow from operating activities Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $35,000 Add (deduct) items to convert net income to cash basis Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,000 Loss on sale of investments . . . . . . . . . . . . . . . . . . 2,000 Accounts receivable decrease . . . . . . . . . . . . . . . . 6,000 Inventory increase . . . . . . . . . . . . . . . . . . . . . . . . . . (28,000) Prepaid advertising increase . . . . . . . . . . . . . . . . . . (3,000) Accounts payable increase . . . . . . . . . . . . . . . . . . . 13,000 Wages payable increase . . . . . . . . . . . . . . . . . . . . . 3,500 Income tax payable decrease . . . . . . . . . . . . . . . . . (1,500) Net cash provided by operating activities . . . . . . . . . $38,000 Cash flows from investing activities Sale of investments . . . . . . . . . . . . . . . . . . . . . . . . 9,000 Purchase of plant assets . . . . . . . . . . . . . . . . . . . . (48,000) Net cash used by investing activities . . . . . . . . . . . . . (39,000) Cash flows from financing activities Issuance of common stock . . . . . . . . . . . . . . . . . . . 14,000 Payment of dividends . . . . . . . . . . . . . . . . . . . . . . . (17,000) I Net cash used by financing activities . . . . . . . . . . . . . (3,000) Net decrease in cash . . . . . . . . . . . . . . . . . . . . . . . . . (4,000) Cash at beginning of year . . . . . . . . . . . . . . . . . . . . . 12,000 Cash at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,000 mart Law ‘buuab'l' M61140) b) Indirect Method y, _ ” " 3- (.2 EXPR'E'sso ROYALE ? I / - _ _ _- ' '-'."5“ - ’1';;'-;-j-f$tatéi"rien't' of Cash'Flovvefii-i / ' ' ' Per Year Ended December 31, 2009 i" .; / Net cash flow from operating activities Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $35,000 ('- Add (deduct) items to convert net income to cash basis Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,000 _ _ Loss on sale of investments . . . . . . . . . . . . . . . . . . 2,000 “DI-V“ TM r' N TS Accounts receivable decrease . . . . . . . . . . . . . . . . 6,000 470 N T— Inventory increase . . . . . . . . . . . . . . . . . . . . . . . . . . (28,000) _, Prepaid advertising increase . . . . . . . . . . . . . . . . . . (3,000) if" [‘le Accounts payable increase . . . . . . . . . . . . . . . . . . . 13,000 gas“ pw (,4 \‘RDM Wages payable increase . . . . . . . . . . . . . . . . . . . . . 3,500 OPS Income tax payable decrease . . . . . . . . . . . . . . . . . (1,500) ~ Net cash provided by operating activities . . . . . . . . . $38,000 {—— Cash flows from investing activities Sale of investments . . . . . . . . . . . . . . . . . . . . . . . . 9,000 Purchase of plant assets . . . . . . . . . . . . . . . . . . . . (48,000) Net cash used by investing activities . . . . . . . . . . . . . (39,000) Cash flows from financing activities Issuance of common stock . . . . . . . . . . . . . . . . . . . 14,000 Payment of dividends . . . . . . . . . . . . . . . . . . . . . . . (17,000) I Net cash used by financing activities . . . . . . . . . . . . . (3,000) Net decrease in cash . . . . . . . . . . . . . . . . . . . . . . . . . (4,000) Cash at beginning of year . . . . . . . . . . . . . . . . . . . . . 12,000 Cash at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,000 :i’usa“ was; ‘DILEUT M61140) EXPRESSO ROYALE Balance Sheets Dec. 31, 2009 Assets Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 8.000 Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . 22,000 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94.000 Prepaid advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.000 Long—town investments~Avallabia~tor~sa|e . . . . . . . . 30,000 Fair value adjustment to investments . . . . . . . . . . . . . -- Plant assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173.000 Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . (72,000) Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $272,000 Liabilities and Equity Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 27.000 Wages payable . . . . . . . . . . . . , . . . . . . . . . . . , . . . . . 6.000 income tax payable . . . . . . . . . . . . . . . . . . . . . . . . . . 3.000 Common stock . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . 139.000 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . 97.000 Unrealized loss on investments . . . . . . . . . . . . . . . . , - Total liabilities and equity . . . . . . . . l . , . . . . . . . . . . . $272,000 EXPRESSO ROYALE Income Statement For Year Ended December 31, 2009 Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dividend income . . . . . . . . . . . . . . . . . . . . . . . Cost of goods sold . . . . . . . . . . . . . . . . . . . . . $233,000 Wages expense . . . . . .. . . . . . . . . . . . . . . . . . 82.000 Advertising expense . . . . . . . . . . . . . . . . . . . . 10,000 Depreciation expense . . . . . . . . . . . . . . . . . . . 11,000 Income tax expense. . . . . , . . . . , . . . . . _. , . . 17,000 Loss on sale of investments . . . . . . . . . . . . . . 2,000 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . Dec. 31, 2008 0 12.000 28.000 50,000 9000 41.000 (1.000) 130.000 (01.000) $224000 $ 1 4.000 2.500 4 .500 1 25,000 79,000 (1 .000) $224,000 1 1 $385,000 5.000 390.000 355.000 $ 35.000 4. Understanding the Adjustments to Net Income to get Cash Flow from Operations — Indirect Method 1) Add Back to Net Income, all non—cash eXpense Subtract from Net Income, all non—cash gains 2) Subtract from Net Income, increase in Current Assets‘“ Add to Net Income, decrease in. Current Assets“ Current Assets except cash and Shortwterm Investments (Marketabie Securities") 3) Subtract "from Net Income, decrease in Current Liabilities ** Add to Net Income, increase. in Current Liabilities MCurrent Liabilities except Short—term Borrowing Km; 1 LI) NON - CAM EN’CNSE - EXAMPLE ? DEVMMATION ()«PFNSE \___7 .1, N51" \NLOME my. DWLEMATION EXPENSE ¢ man How PKOM 0P5. K2.) \Ncume \N mum—r Asset; , CXWPUE W Lu: AS 6 1M Acwv MT; Regen] Ms M; cm:be 5mg; Acpov MT: KG u: N W u; \ SME’S XX KR ____,’F NET \NCOME U538; \NQVVEME {N A'LLOON’IS MODVM‘ILB' xx ¢ CMH How FMM ms game,qu m Q’VKUEN'I LAM‘HLITIES - bera \Ncu’rde \N Mum-s ?M1sz ExPcheg ' . 0N (AWN sewn»; {APENSES ‘IY Recount“ PMM’SLE W J,sz Inn/0M6 A4»: Woman/CE \N Acwvm’rs mea ¢ CMH Paw (’KoM ors W DEOWME \N bx/«KMENT Ufifhuncr ~b<Mvu>tg DeLREME \N mow-rs FWWLE “PM Nb‘ ON- Piccoan Pkme Amouth PM RME’ 2» Ohm xx, L—a S25 N€T \NLOME Lass: ‘DchEME \N Mama PwaIz/w W A, Man How FAoM OPS - (5‘) lNcLEPrQG IN CALULFNT Aiun's + \NLMFAvg-E \N LuMJé'N-r UMMMTWS - EXRMvLc L T m \Nvemwml 1‘ IN Mum-n fi’r‘fficME \MVENTo w u; I’er UMTS ?kyko 96 L9 (23 NW \McoME Less: \NLKE’ME m Mumfom Us A“): \NLLFME w A'PWA'ALE, 1:1: (2)” GMH How LLoM or; PREPARATION OF THE STATEMENT OF CASH FLOWS CW — 1: Prepare the Statement of Cash Flows using the Indirect Method E-f'ilIJ-uf Film-.4. 1mg. is dumlulaing i15- nnnuni t'immfliul alulm'mrms :11 lilh-xcn1inc113l. 2812.1"!1: Staicmcms are: mmplulc ervugfl For 1hr: alnljennml ryai' [3:1511 firtmxs. The." mmphrlcd cmnpm'nlivc [His-mm: sheen; and immun- HEiitIlK-‘Hl 5.1!?fiHlIlilli-II'i-dk‘i'l 51:: H-Hmw: it: i If}? I I Balance shun: m fist-umber 3] I C3511 ‘8 “SEEM ‘5 63.5110 Sat-mum raven-Hui: lilfifi- 222.5111 h=3er'ci1:mdi5:z: isz~.-'L~nIm-j.- 2.1.3:?” £81160 Pmpux'iy Lm-IJ Gullipl'abxii! 31:919.} .i.5{._‘lil{.}[} 1.11.54: Mtg-unmiuicd dry” min: in} 459.0[109 (41.750; K;?:a{-..L.It.lu $£EIIISJJIJI£I .-‘«cmunm pL-Lyuldc. 5; 9mm *5 [9,000 \W’u I35 gin}; id) is .11.] I ‘sl’? I gm )[1 Hole pzlyuhfifi hum-tum 133.54 1“] TLQIJU Com n'hufiud capital DEEUU (fig—NIH Retained enminga 5533.51"in 5iLiJUE3 J.§_f__'}é!_ $1103 JIM!) Income: slittelnuul I'm‘ 2012 S ELIE-S 2‘5 1 ‘95 .111 Eli] C3051 nf Ligands; mer {JILUETH'} Dcprccieuion cxpensc H.150 Other u); [mum's _ 43-} l Net inwnm- ifir‘FSU Additional Data: a- Bungln equipment l'm‘mst'l, $59.25fi}. :‘L Paid $1 [.500 an (hr-3. long—term more payable c". Issued new mart-:5; {if stock for 331600 c3511. 5}. Divicfemls of S 116% wcra declared and paid, c‘. Other mpcnscs all refine. 10 wagca. f. Accomus payable inciuclcs nut}? invcnmry puruhams Hunk: mm credit. HiDef Films, lnc. Statement of Cash Flows For the Year Ended December 31, 2012 Cash flows from operating activities: Net income Net cash provided by operating activities Cash flows from investing activities: Cash flows from financing activities: Net cash provided by financing activities Net increase in cash during the year Cash balance, January 1, 2012 Cash balance, December 31, 2012 Statement of Cash Flows For the Year Ended December 31, 2012 HiDef Films, Inc. Cash flows from operating activities: Net income $46,750 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense $13,250 Decrease in accounts receivable 7,000 F Increase in merchandise inventory (4,250) Decrease in accounts payable (10,000) P Increase in wages payable 2,800 8,800 Net cash provided by operating activities 55,550 Cash flows from investing activities: Cash payments to purchase fixed assets Cash flows from financing activities: Cash payments on long-term note (11,500) Cash payments for dividends (12,65Tl 1 Cash receipts from issuing stock 32,600 — Net cash provided by financing activities 8,450 Net increase in cash during the year 4,750 Cash balance, January 1, 2012 Cash balance, December 31, 2012 $68,250 HiDef Films Inc. Statement of Cash Flows Cash flows from operating activities: For the Year Ended December 31, 2012 Collections from customers Payments to suppliers Payments for wages Net cash provided by operating activities Cash flows from investing activities: Cash payments to purchase fixed assets (59,250) Cash flows from financing activities: F Cash payments on long—term note (11,500) Cash payments for dividends (12,650) Cash receipts from issuing stock 32,600 Net cash provided by financing activities 8,450 |_Net increase in cash during the year 4,750 ' Cash balance, January 1, 2012 63,500 Cash balance, December 31, 2012 $68,250 IO HiDef Films lnc. L Statement of Cash Flows For the Year Ended December 31, 2012 Cash flows from operating activities: Collections from customers ($195,000 + $7,000) $202,000 Payments to suppliers ($92,000 + $4,250 + $10,000) (105,250) Payments for wages ($43,000 — $2,800) Net cash provided by operating activities (40,200) 55,550 Cash flows from investing activities: Cash payments to purchase fixed assets (59,250) ' Cash flows from financing activities: Cash payments on long—term note (11,500) Cash payments for dividends (12,550) Cash receipts from issuing stock 32,600 Net cash provided by financing activities 8,450 Net increase in cash during the year 4,750"— Cash balance, January 1, 2012 63,500 Cash balance, December 31, 2012 $68,250 \O 5. Analyzing the Statement of Cash Flows ReIaiion of Revenues, Net Income Flows, and Cash Flows from Operations, Investing, and Financing at Various Stages of Product Life Cycfe Revenues 0 _ Introduction Umwzh Matmity DecIine Net‘ Income + o . G mwt h M 2111! rit 3' Financing -(— Life Cycle Phases 11 P — 1: (Stickney & Weil) Compare and contrast the Statement of Cash Flows of the two compames Overstookcom Statement of Cash Flows (amounts in thousands) Year 4 Year 3 Year 2 Operations Net Income (Loss) ....................................... .. $ (5,002) $01,887) $ (4,560) Depreciation and Amortization . . . . . . . . . . . . . . . . . . . i . . . . .. 3,937 2,325 1,873 Other Additions and Subtractions ..................... .. 873 1,022 4,463 Adjustments for Changes in Working Capital: (Increase) Decrease in Accounts Receivable . . . . . . . . . . . .. 4,468 (3,189) (5,429) (Increase) Decrease in Inventories . . . . . . . . . . . . . . . . . . . . . .. (24,729) (17,556) (7,467) (Increase) Decrease in Other Current Assets . . . . . . . . . . .. (1,807) (666) (758) Increase (Decrease) in Accounts Payable . . . . . 1 . . . . . . . . .. 33,697 16,632 10,051 Increase (Decrease) in Other Current Liabilities . . . . . . .. 13,601 2,907 4,316 Cash Flow from Operations . . . . . . . . . . . . . . . . . . . . . . . . . .. $ 25,038 $00,412) 5 2,489 Investing Fixed Assets Acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $ (8,714) $ (6,707) $ (1,746) Change in Marketable Securities ....................... .. (79,106) 10,025 (21,576) Other Investing Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (172) (5) Cash Flow from Investing ............................ .. 3; (87,820) $ 3,146 $(23,327) Financing Increase in Long-Term Borrowing ..................... .. $116,199 $ — $ 1,160 Issue of Common Stock ................................ .. 117,352 25,195 32,929 Decrease in Long—Term Borrowing . . . . . . . . . . . . . . . . . . . . .. (959) (141) (5,921) Other Financing Transactions .......................... .. 22 (1) ~— Cash Flow from Financing . . . . . . . , . . . . . . . . . . . . . . . . . . . .. $232,614 $ 25,053 $ 28,168 Change in Cash ............................................... .. $169,832 $ 17,787 $ 7,330 Cash—Beginning of Year ............................... .. 28,846 11,059 3,729 Cash—End of Year ...................................... .. $198,678 $ 28,846 $ 11,059 Growth in Revenues from Previous Year ....... ..... .. 107.0% 160.3% 129.4% 12 P — 1: (Stickney & Weil) Compare and contrast the Statement of Cash Flows of the two companles Overstock.com Statement of Cash Flows (amounts in thousands) Year 4 Year 3 Year 2 Operations Net Income (Loss) ....................................... .. $ (5,002) $(11,887) $ (4,560) (—- Depreciation and Amortization ........................ .. 3,937 2,325 1,873 Other Additions and Subtractions ..................... .. 873 1,022 4,463 Adjustments for Changes in Working Capital: <‘ (Increase) Decrease in Accounts Receivable ........... .. 4,468 (3,189) (5,429) ; (Increase) Decrease in Inventories ..................... .. (24,729) (17,556) (7,467)?- (Increase) Decrease in Other Current Assets .......... .. (1,807) (666) (758) L Increase (Decrease) in Accounts Payable .............. .. 33,697 16,632 10,051 €— Increase (Decrease) in Other Current Liabilities ...... .. 13,601 2,907 4,316 6— Cash Flow from Operations ......................... .. $ 25,038 $ 10 412) $ 2,489 Investing Fixed Assets Acquired ................................... .. $ (8,714) $ (6,707) $ (1,746) Change in Marketable Securities ....................... .. (79,106) 10,025 (21,576) Other Investing Transactions ........................... .. — (172) (5) Cash Flow from Investing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $ 87,820) $ 3,146 $(23,327) Financing Increase in Long—Term Borrowing ..................... .. —) $116,199 $ —- $ 1,160 Issue of Common Stock ................................ .. u—Q 117,352 25,195 32,929 Decrease in Long-Term Borrowing .................... .. (959) (141) (5,921) Other Financing Transactions .......................... .. 22 ( 1) — Cash Flow from Financing ........................... .. $232,614 $ 25,053 $ 28,168 Change in Cash ............................................... .. $169,832 $ 17,787 $ 7,330 Cash—Beginning of Year ............................... .. 28,846 11,059 3,729 Cash—End of Year ...................................... .. $198,678 $ 28,846 $ 11,059 Growth in Revenues from Previous Year ....... ..... .. 107.0% 160.3% 129.4% emu How; HR. mamas/tramr—M’ FIRM? Johnson & Johnson Statement of Cash Flows (amounts in millions) Year 4 Year 3 Year 2 Operations Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $ 8,509 $ 7,197 $ 6,597 Depreciation and Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2,124 1,869 1,662 Deferred Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. (498) (720) (74) Other Additions and Subtractions . . . . . . . . . . . . , . . . . . . . . . . . . . . . . r . . . ,. 21 924 183 Adjustments for Changes in Working Capital: (Increase) Decrease in Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . .. (111) (691) (510) (Increase) Decrease in Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 11 39 (109) (Increase) Decrease in Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. (395) (746) (1,429) Increase (Decrease) in Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . .. 607 2,192 1,420 Increase (Decrease) in Other Current Liabilities . . . . . . . . . . . . . . . . . . .. 863 531 436 Cash Flow from Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $11,131 $10,595 $ 8,176 Investing Fixed Assets Sold . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $ 237 $ 335 $ 156 Fixed Assets Acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. (2,175) (2,262) $(2,099) Acquisition of Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. (580) (2,812) (478) Change in Marketable Securities . . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . .. 444 472 430 Other Investing Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ., (273) (259) (206) Cash Flow from Investing . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . .. $(2,347) $(4,526) $(2,197) Financing Increase in Short-Term Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $ 514 $ 3,062 $ 2,359 Increase in Long—Term Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 17 1,023 22 Issue of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 642 311 390 Decrease in Short-Term Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. (1,291) (4,134) (560) Decrease in Long-Term Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. (395) (196) (245) Acquisition ofCommon Stock . . . . . . t . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. (1,384) (1,183) (6,538) Dividends ............................................................. .. (3,251) (2,746) (2,381) Other Financing Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 190 277 110 Cash Flow from Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $(4,958) $ 3,586) $(6,843) Change in Cash . , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $ 3,826 $ 2,483 $ (864) Cash—Beginning of Year . . . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . .. 5,377 2,894 3,758 Cash—End onear . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . . . . . .. $ 9,203 $ 5,377 $ 2,894 Growth in Revenues from Previous Year . . . . . . . . . . . . . . . . . . . . . . . . . . .. 13.1% 15.3% 12.3% 13 Johnson 8 Johnson Statement of Cash Flows (amounts in millions) Year 4 Year 3 Year 2 Operations Net Income .......................................................... .. $ 8,509 $ 7,197 $ 6,597 Depreciation and Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ._ 2,124 1,869 1,662 Deferred Income Taxes .............................................. .. (498) (720) (74) Other Additions and Subtractions ................................. .. 21 924 183 Adjustments for Changes in Working Capital: . (Increase) Decrease in Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . .. (111) (691) (510) (Increase) Decrease in Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 11 39 (109) (Increase) Decrease in Prepayments . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . .. (395) (746) (1,429) Increase (Decrease) in Accounts Payable .......................... .. 607 2,192 1,420 Increase (Decrease) in Other Current Liabilities . . . . . . . . . . . . . . . . . . .. 863 531 436 Cash Flow from Operations ..................................... .. $11,131 $10,595 3 8,176 {-— Investing Fixed Assets Sold .................................................... .. $ 237 $ 335 $ 156 Fixed Assets Acquired ............................................... .. (2,175) (2,262) 59,099) (— Acquisition of Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. (580) (2,812) (478) Change in Marketable Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 444 472 430 Other Investing Transactions ....................................... .. (273) (259) (206) Cash Flow from Investing . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $(22347) $(4,526) $ 2,197)(—- Financing Increase in Short—Term Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $ 514 $ 3,062 $ 2,359 Increase in Long—Term Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 17 1,023 22 Issue of Common Stock ............................................ .. 642 311 390 Decrease in Short-Term Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. (1,291) (4,134) (560) Decrease in Long-Term Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. (395) (196) (245) Acquisition of Common Stock ..................................... .. (1,384) (1,183) (6,538) Dividends ............................................................. .. (3,251) (2,746) (2,381) Other Financing Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 190 277 110 Cash Flow from Financing . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . .. $(4,958) $(3,586) $ 6,843) #- Change in Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $ 3,826 $ 2,483 $ (864) Cash—Beginning onear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 5,377 2,894 3,758 Cash—End onear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $ 9,203 $ 52377 $ 2,894 Growth in Revenues from Previous Year .......................... .. 13.1% 15.3% 12.3% T3171 - MATMLKE. FIRM — mvegmmr (N (was M41611 a» Mrmomriw 5x1" =7 rm Nor amwwc, mm; B Lot 13 ...
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CHAPTER13 - CHAPTER 13: STATEMENT OF CASH FLOWS 1. Why the...

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