The Statement of Cash Flows

DQ1 The Statement of Cash Flows

Referencing this week’s readings and lecture, describe the following terms as they relate to the statement of cash flows: cash, operating activities, investing activities, and financing activities. What can creditors, investors, and other users glean from an analysis of the statement of cash flows?

DQ2 Analyzing the Statement of Cash Flows

Using the table below, explain the difference between net income and cash flow from operating activities for Techno in 2009 and analyze their cash flows for 2008 and 2009.

(in thousands)   2009       2008

Net income        $ 316,354             $  242,329

Noncash charges (credits) to income                     

Depreciation and amortization        68,156                    62,591

Deferred taxes      15,394                    22,814

$ 399,904             $  327,734

Cash Provided (Used) by Operating Assets and Liabilities:                            

Receivables          (288,174)                (49,704)

Inventories           (159,419)              (145,554)

Other current assets            (1,470)                    3,832

Accounts payable, accrued liabilities              73,684                   41,079

Total Cash Provided by Operations             $ 24,525             $  177,387

Investment activities                     

Additions to plant and equipment               (94,1760)               (93,136)

Other investment activities               14,408                  (34,771)

Net investment activities               ($ 79,768)          ($ 127,907)

Financing activities                         

Purchases of treasury stock             (45,854)                (39,267)

Dividends paid       (49,290)                (22,523)

Net changes in short-term borrowing         125,248                   45,067

Additions to long-term borrowings              135,249                     4,610

Repayments of long-term borrowings                       (250,564)

Net financing activities  $  165,353            ($ 262,677)

Increase (decrease) in cash         $  110,110            ($ 213,197)

Beginning cash balance       78,114                 291,311

Ending cash balance        $  188,224            $    78,114

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