The Nestl Group is the world's leading nutrition, health, and wellness company. Its statement of cash flows

The Nestlé Group is the world's leading nutrition, health, and wellness company. Its statement of cash flows for fiscal years 2009 and 2008 and the related notes are shown below.

Required:
1. The cash flows from operating activities show that "depreciation of property, plant, and equipment" in Note 22.1 is added to "profit." Is depreciation (or amortization) a source of cash? Explain.
2. Was the cash collected from customers during fiscal year 2009 higher or lower than the Nestle Group's sales revenue for that year? Explain.
3. Explain why the Nestlé Group's cash flow from operations increased in 2009 compared to 2008. while its profit decreased during the same year?

4. Did the Nestlé Group expand during 2008 and 2009? If so, how did the company pay for its expansion? Explain.
5. Compute and analyze the Nestlé Group's quality of earnings ratio, capital acquisitions ratio, and free cash flow for both years.

Transcribed Image Text:

Consolidated Cash Flow Statement For the Year Ended 31 December 2009 In millions of CHF 2009 2008 Operating activities Profit for the year 11,793 19,051 Non-cash items of income and expense 3,478 (6.157) Decrease/(increase) in working capital 2,442 (1,787) Variation of other operating assets and liabilities 221 (344) Operating cash flow 17,934 10.763 Investing activilles Capital expenditure (4,641) (4.869) Expenditure on intangible assets (400) (585) Sale of property, plant, and equipment 111 122 Acquisition of businesses (796) (937) Disposal of businesses 242 10,999 Cash flows with associates 195 266 Other investing cash flows (110) (297) Cash flow from investing activities (5,399) 4,699 Financing activities Dividend paid to shareholders of the parent (5.047) (4.573) Purchase of treasury shares (7,013) (8,696) Sale of treasury shares and options exercised 292 639