83 724 net change in cash 2001 2002 2003 2004 2005

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paid for tax withholding requirements. 83 7.2.4 Net Change in Cash 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Cash From Operations (34.0 8) (60.2 ) 17.2 (134.2 ) 110 51.9 53.4 88.12 (183.10 ) (127) (2.9) Cash From Investments (29.7 ) 7.3 4.8 (132.7 ) (15.3) (145. 3) (90.6 ) 203.3 (228.6) (51.9 ) (36.4 ) Cash From Financing 54.93 54.4 (22.7 ) 267.1 10.8 24.1 40.1 28.4 175.8 109. 1 57.2
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Lions Gate Entertainment Total Cash (8.85 ) 1.5 (0.7) 0.2 105.5 (65.3 ) 4.4 320.8 2 (235.9) (69.8) 17.9 From their annual reports we see that the company makes significant initial expenditures to produce, acquire, distribute and market films and television programs, while revenues are earned over an extended period of time. The changes in the cash flows describe the company’s strategy and what vehicles it uses to advances. It also describes the company’s financing strategy which is to fund operations and to leverage investments in films and television programs through cash flow from operations, their senior revolving credit facility, single-purpose production financing, the Film credit facility, government incentive programs, film funds, and distribution commitments. Lionsgate entertainment is a fast paced company which relies on acquisitions to compete and advance in the motion pictures and video production industry where competition is fierce. The company stated in its’ annual statements that it has a strategy of following a disciplined approach to acquisition, production and distribution in order to enhance their competitive advantage. The company has been successful in following its goals as the details of their numbers above state. For example in 2007, Lionsgate entertainment spent $8.3 million for purchases of property and equipment, $24.1 million for the acquisition of Debmar-Mercury, and $5.1 million for the investment in FEARnet.In 2008, the company spent $3.6 million for purchases of property and equipment, $6.5 million for the investment in equity , $41.2 million for the acquisition of Mandate Pictures. In 2009 it spent $243.2 million for the acquisition of TV Guide Network, $8.7 million for purchases of property and equipment, $18.0 million for the investment in equity and in 2010 it spent $3.7 million for purchases of property and equipment. Again in 2011 $15.0 million for the buy-out of the earn-out associated with the acquisition of Debmar-Mercury, $2.8 million for purchases of property and equipment and $24.7 million of capital contributions to companies accounted as equity, $47.1 million for the investment in equity. Hence we see that changes in the cash flows fit with the pacing and stage of the company’s strategy and the vehicles it has used. 7.3 Value for Investors In this section we examine whether the company is creating value for its investors. We study if the company is earning more on the money invested than its costs. We looked into the average of return on invested capital (ROIC) over the past 5 years and compared it to the weighted average cost of capital (WACC) over the past 5 years. We found that ROIC is equal to -1.33 % while
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Lions Gate Entertainment WACC is equal to 7.52%.This indicates that the company is not creating enough value for its shareholders since the ROIC is less than WACC then value is actually removed as the company invests more capital; for every dollar invested it pays out more than it earns with it. In our case
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