Further Cash Flow Analysis The team meeting about Tower Company that you prepared for in P13-—36 went very well. You were well prepared, so much so that the team gave you another list of questions to answer. These look harder, but you remember that all the financial statements report on operating, investing, and financing activities, and the cash flow statement helps tie them all together. Again, where would you look in Tower’s financial statements or notes to answer the following questions?

a. Over the past 2 years, has Tower been investing enough in operating assets to maintain operating capacity?

b. Does Tower have any long-term lease commitments and, if so, how much are the required annual payments on these leases?

c. Has Tower changed the ratio of debt to equity over the past 2 years? In other words, has Tower issued proportionally more debt than stock?

d. Has the company reported any major unusual transactions or events that have affected reported net income? What effect, if any, has this had on cash flows?

e. Are there significant unfunded pension or other post-employment benefit obligations? If so, when will they require cash payments?

f. Tower reports a deferred tax liability in the most recent financial report. When will this liability have to be paid?
How much cash will be involved?