Go to www.carnival.com, select About Us and find Investor Relations. You will find a link to the annual report (pdf file). Find the annual cash flow statement (page 7 of the 2005 annual report) to answer the following questions.

a. Does Carnival use the direct or the indirect method to prepare the statement of cash flows? How can you tell? Which activity section is affected by this choice of method?

b. For the most recent year, list the amount of net cash inflow or outflow from each of the three major types of activities reported on the statement of cash flows. Which type of activity is providing the most cash? Is this considered favorable or unfavorable?

c. For the most recent year, what amount is reported for net income and net cash from operating activities? Are these amounts the same? Explain why or why not.

d. For the most recent year, did Carnival report cash inflows or outflows for capital expenditures? Is this considered favorable or unfavorable? Explain why. What do you think these capital expenditures are primarily for? What was the net amount of the capital expenditure? Which activity section reports this information?

e. For the most recent year, what amount of cash dividends did Carnival pay out? For the most recent year did Carnival issue or retire any common stock? What was the net amount issued or retired? For the most recent year did Carnival issue or retire any long-term debt? What was the net amount issued or retired? Which activity section reports this information?

f. Does this statement of cash flows indicate a strong or weak position with regard to cash and liquidity? Explain.