Finally agilent is generating cash from operations

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Unformatted text preview: and, is using cash to return to shareholders and/or repay debt. Both companies are investing cash in long­term assets. Finally, Agilent is generating cash from operations, while AMD’s core business is losing cash balances. Overall, the net change in cash is similar for both companies, but AMD is only generating cash through financing, while Agilent is increasing cash balances from its daily operations. c. Cash from operations exceeds the net income(loss) figure due to depreciation, other non­cash expenses and the change to operating accounts (such as receivables, payables). The difference in Cash from Financing Activities tells you that AMD is having to supplement its cash balance deficits (from operations) through borrowings and/or equity issuances while Agilent is able to use the positive cash generated by its operations to pay dividends and/or repurchase shares and/or reduce debt. BE14–5 a. In 2007 profit was below operating cash flows because the change in operating accounts (such as receivables and payables) acted as a source of cash balances. Receivables decreased and/or payables increased, increasing cash balances as the cash was freed up from the operating account line(s). In 2008, when profits exceeded operating cash flows, the change in account balances reversed from what happened in the prior year. The operating accounts in 2008 were a use of cash, with receivables increasing and/or payables decreasing (which tied up cash in the operating account line). b. In 2007 the company used its impressive cash flow from operations and combined it with the proceeds from debt and equity issuances to fund a rather large investment in long term assets. In 2008, the company sold off some long term assets and used that cash, along with the amount generated from operations, to pay dividends, repurchase shares, and/or reduce debt. EXERCISES E14–1 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Investing activity Financing activity Operating activity Financing activity Investing activity Investing activity (for the cash paid for the building) Financing...
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