1. Is Google's statement of cash flows using the direct or indirect method? 2. For each fiscal year 2017, 2016, and 2015 identify the amount of cash provided by operating activities and cash paid for dividends. 3. In 2017, did Google have sufficient cash flows from operations to pay dividends? 4. Did Google spend more or less cash to repurchase common stock in 2017 vs 2016? Google Inc. (Alphabet Inc.) CONSOLIDATED BALANCE SHEETS (In millions, except share and par value amounts which are reflected in thousands, and par value per share amounts) As of December 31, 2016 As of December 31, 2017 $ 12,918 73.415 86,333 14,137 Assets Current assets Cash and cash equivalents Marketable securities Total cash, cash equivalents, and marketable securities Accounts receivable, net of allowance of $467 and $674 Income taxes receivable, net Inventory Other current assets Total current assets Non-marketable investments Deferred income taxes Property and equipment, net Intangible assets, net Goodwill Other non-current assets Total assets Liabilities and Stockholders' Equity Current liabilities Accounts payable Accrued compensation and benefits Accrued expenses and other current liabilities 268 4,575 105,408 5,878 383 34,234 3,307 16,468 1,819 167,497 10,715 91,156 101.871 18,336 369 749 2,983 124,308 7,813 680 42,383 2,692 16,747 2,672 197,295 $ 2,041 3,976 6,144 2.942 3.137 4,581 10.177 3.975 6,144 2,942 1.099 554 16,756 3,935 202 4,677 226 2,665 28,461 10.177 3,975 1,432 881 24,183 3,969 300 12,812 400 10 44,793 Accrued expenses and other current liabilities Accrued revenue share Deferred revenue Income taxes payable, net Total current liabilities Long-term debt Deferred revenue, non-current Income taxes payable, non-current Deferred income taxes Other long-term liabilities Total liabilities Commitments and contingencies Stockholders' equity Convertible preferred stock, S0.001 par value per share, 100,000 shares authorized; no share issued and outstanding Class A and Class B common stock, and Class C capital stock and additional paid-in capital, 50.001 par value per share: 15,000,000 shares authorized (Class A 9,000,000. Class B 3,000,000, Class C 3,000,000); 691,293 (Class A 296,992, Class B 47,437. Class C 346,864) and 694,783 (Class A 298,470, Class B 46,972, Class C 349,341) shares issued and outstanding Accumulated other comprehensive loss Retained carnings Total stockholders' equity Total liabilities and stockholders' cquity 36,307 (2,402) 105.131 119,036 167.497 40,247 (992) 113.247 152502 197,295 "Google is part of Alphabet, but we loosely refer to Alphabet as "Google" because of its global familiarity and that Google provides 99% of Alphabet's S1 10,855 billion in revenues. See accompanying notes. 2016 90,272 2017 110,855 $ S 35,138 13,948 10,485 6,985 Google Inc. (Alphabet Inc.) CONSOLIDATED STATEMENTS OF INCOME (In millions) Year Ended December 31 2015 Revenues $ 74,989 Costs and expenses Cost of revenues 28,164 Research and development 12,282 Sales and marketing 9,047 General and administrative 6,136 European Commission fine Total costs and expenses 55,629 Income from operations 291 Other income (expense), net Income before income taxes 19.651 3,303 Provision for income taxes 16,348 Net income 522 Less: Adjustment Payment to Class C capital stockholders 15.826 Net income available to all stockholders 66,556 23,716 45,583 16,625 12,893 6,872 2.736 84.700 26,146 1.047 27.193 14,531 12.662 19.100 434 24.150 4,672 19,478 $ $ $ 19,478 S 12,662 Google is part of Alphabet, but we loosely refer to Alphabet as "Google" because of its hal familiarity and that Google provides 99% of Alphabet's $110,855 billion in revenues. 2016 19,478 2017 12,662 $ (599) 1,543 Google Inc. (Alphabet Inc.) CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) Year Ended December 31 2015 - Net income 16,348 S Other comprehensive income (loss): Change in foreign currency translation adjustment (1,067) Available for sale investments: Change in net unrealized gains (losses) (715) Less: reclassification adjustment for net (gains) losses included in net income 208 Net change (net of tax effect of $29, 30, and $0) (507) Cash flow hedges: Change in net unrealized gains (losses) 676 Less: reclassification adjustment for net (gains) losses included in net income (1,003) (327) Net change (net of tax effect of $115, S64, and $247) (1,901) Other comprehensive income (loss) 14,447 Comprehensive income $ 307 (314) 221 (93) TOS 412 (638) 93 515 (351) 164 (528) 18,950 (545) 1,410 14,072 $ "Google is part of Alphabet, but we loosely refer to Alphabet as "Google" because of its global familiarity and that Google provides 99% of Alphabet's $110,855 billion in revenues See accompanying notes. Page A-12 Google Inc. (Alphabet Inc.) CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (In millions, except share amounts which are reflected in thousands) Google Inc. (Alphabet Inc.)" CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (In millions, except share amounts which are reflected in thousands) Class A and Class B Common Stock, Class C Accumulated Capital Stock and Other Additional Paid-In Capital Comprehensive Shares Amount Income (Loss) Balance as of December 31, 2014 680,172 S 28,767 S 27 $ Common and capital stock issued 8.714 0 Stock-based compensation expense 5.151 Stock-based compensation tax benefits 815 Tax withholding related to vesting of restricted stock units (2.779) Repurchases of capital stock (2,391) (111) 0 Adjustment Payment to Class C capital stockholders 833 Net Income Other comprehensive loss (1.901) Balance as of December 31, 2015 32.982 (1,874) Retained Earnings 75,066 0 Total Stockholders Equity $ 103.860 664 664 5.151 BIS (2,779) (1.780) (1.669) (522 16,348 16,348 (1.901) 120.331 687,348 89.223 (133) 9,106 Cumulative effect of accounting change Common and capital stock issued Stock-based compensation expense Tax withholding related to vesting of restricted stock units Repurchases of capital stock Not income Other comprehensive loss Balance as of December 31, 2016 INO 298 6,700 (3.597) (256 (5,161) (3.437) 298 6,700 (3.597) (693) 19.478 (528) 139,036 19.478 691.293 36,307 (528) (2.402) 105,131 Cumulative effect of accounting change (IS) (15) 0 19,478 0 (528) (2.402) 19,478 (528) 139,036 691.293 36,307 105,131 0 0 (15) (15) 8.652 212 Net income Other comprehensive loss Balance as of December 31, 2016 Cumulative effect of accounting change Common and capital stock issued Stock-based compensation expense Tax withholding related to vesting of restricted stock units Repurchases of capital stock Sale of subsidiary shares Net income Other comprehensive loss Balance as of December 31, 2017 0 212 7.694 (4,373) (315) 0 7.694 (4.373) (4.846) (5.162) (4.531) 722 0 0 694,783 S 0 01 ,410 40.247 S 992) S 12,662 0 113.247 S 12.662 1,410 152,502 "Google is part of Alphabet, but we loosely refer to Alphabet as "Google" because of its global familiarity and that Google provides 99% of Alphabet's $110,855 billion in revenues. See accompanying notes. Page A-13 Google Inc. (Alphabet Inc.)" CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) 2015 2016 2017 Year Ended December 31 Operating activities Nincome $ 16,348 $ 19,478 $ 12.662 2016 2017 S 19,47% S 12,662 5.267 6,103 812 877 6.703 7,679 275 Google Inc. (Alphabet Inc.) CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) Year Ended December 31 2015 Operating activities Net income S 16348 Adjustments: Depreciation and impairment of property and equipment 4,132 Amortization and impairment of intangible assets Stock-based compensation expense 5,203 Deferred income taxes (179 Loss on marketable and non-marketable investments, net 334 Other 212 Changes in assets and liabilities, bet of effects of acquisitions Accounts receivable 12.094) Income taxes, nel (179) Other assets (318) Accounts payable 203 Accrued expenses and other liabilities 1 597 Accrued revenue share 330 Deferred revenue Nel cash provided by operating activities Investing activities Purchases of property and equipment 19.950 Proceeds from disposals of property and equipment Purchases of marketable securities (74,368) Maturities and sales of marketable securities 67005 Birch w estmats 174 137 (3,7681 02.578 3,125 112 8.211 (2.164) 110 1,515 593 4491 985 2652 223 16,036 390 37,091 (10.212) (13,184) (84,509) (93,195) 71,959 TOU 425 (236) 450 (986) (287) 1.419 (31,401) (23,711) (31,165) (2,375) (3,304) (4,166) Larcerar rented to secures renang Investments in reverse repurchase agreements Acquisitions, net of cash acquired, and purchases of intangible assets Proceeds from collection of notes receivable Net cash used in investing activities Financing activities Net payments related to stock-based award activities Adjustment Payment to Class C capital stockholders Repurchases of capital stock Proceeds from issuance of debt, net of costs Repayments of debt Proceeds from sale of subsidiary shares Net cash used in financing activities Effect of exchange rate changes on cash and cash equivalents Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period (1,780) 13.705 (13,728) (3.693) 8,729 (10,064) (4,225) (434) (1,798) 18.347 16,549 (8,332) (170) (3.631) 16,549 12,918 (4.8.16) 4.291 (4,377) 800 18,298) 405 (2,203) 12,918 10,715 S Supplemental disclosures of cash flow information Cash paid for taxes, net of refunds Cash paid for interest, net of amounts capitalized 3.651 96 $ $ 1,643 84 $ S 6,191 84 S "Google is part of Alphabet, but we loosely refer to Alphabet as "Google" because of its global familiarity and that Google provides 99% of Alphabet's $110,855 billion in revenues. See accompanying notes