E4.8. Cash Flow and Earnings: Kimberly-Clark Corporation (Easy) Kimberly-Clark Corporation (KMB) manufactures and markets consumer paper products under brand names that include Kleenex, Scott, Cottonnelle, Viva, Kotex, and WypAll. For fiscal year 2004, the firm reported the following numbers (in millions): Net income (in income statement) Cash flow from operations (in cash flow statement) Interest paid in footnote to cash flow statement Interest income (from income statement) $1,800.2 2,969.6 175.3 17.9 The cash investment section of the 2004 cash statement was reported as follows (in millions): Investing Activities: Capital spending $(535.0) Investments in marketable debt securities (11.5) Proceeds from sales of investments in marketable debt securities 38.0 Net increase in time deposits (22.9) Proceeds from disposition of property 30.7 Other operating investments 5.3 Cash used for investing activities $1495.4)

The fum has a combined federal and state tax rate of 35.6 percent. Calculate:

a. Free cash flow generated in 2004.

b. The accrual component of 2004 net income. Real World Connection Follow the Continuing Case for Kimberly-Clark. See also Exercises E6.14, E7.8, E10.10, and EI1.6 and Minicase M5.3.