Go to the book’s companion website and use information found there to answer the following questions related to Cadbury and Nestlé.

Instructions

(a) What method of computing net cash provided by operating activities does Cadbury use? What method does Nestlé use? What were the amounts of cash provided by operating activities reported by Cadbury and Nestlé in 2008?

(b) What was the most significant item reported by Cadbury and Nestlé in 2008 in their investing activities sections? What is the most significant item reported by Cadbury and Nestlé in 2008 in their financing activities sections?

(c) What were these two companies’ trends in net cash provided by operating activities over the period 2006 to 2008?

(d) Where is “depreciation and amortization” reported by Cadbury and Nestlé in their statements of cash flows? What is the amount and why does it appear in that section of the statement of cash flows?

(e) Based on the information contained in Cadbury’s and Nestlé’s financial statements, compute the following 2008 ratios for each company. These ratios require the use of statement of cash flows data.

(1) Current cash debt coverage ratio.

(2) Cash debt coverage ratio.

(f) What conclusions concerning the management of cash can be drawn from the ratios computed in (e)?