5.6 Analysis of the statement of cash flows The statements of cash flows shown below are from an anonymous IFRS-compliant Swedish company: Profit before tax Adjustments to reconcile profit before tax to net cash provided by operating activities Depreciation, depletion, amortization and impairment 2008 2007 Notes SKK 000s SKK 000s 3,398,589 8,280,786 2,960,276 3,044,376 2008 2007 Notes SKK 000s SKK 000s Amortization of government grants and assets acquired free-of-charge 19 (38,395) (52,375 Write-off of inventories and reversal of impairment (42,350) 11,844 of inventories Increase/decrease) in provisions for liabilities and charges, net 8,885 (334,580 Profit from the sale of intangible assets and property, plant and equipment 19 (18,452) (334,412 Write-off of receivables 10,727 14,998 Profit from the sale of available-for-sale financial assets and subsidiaries (108,503) Impairment of available-for-sale financial assets 23 826,305 Unrealized foreign exhcnage gain on receivables (70,332) (35,702) and payables Other unrealized foreign exchange losses Interest revenue Interest expense on borrowings Other financial (profit)/loss, net Dividends received Other non cash terms Operating cash flow before changes in working capital Decrease/(increase) in inventories Decrease/(increase) in trade receivables Decrease/increase) in other current assets (Decrease/increase in trade payables Increase in other current liabilition 323 138,509 128,892 (63,913) (148,142) 42,267 9,481 (39,127) 21,865 33 23 (1,063,522) (70,165) (20,458) 10,030 6,029,009 10,438,393 1,970,942 (418,799) 4,156,154 (1,013,185) 784,466 (1,614,350) (4,702,919) 2,015,695 Decrease/[increase) in trade receivables 4,156,154 (1,013,185) Decrease/(increase) in other current assets 784,466 (1,614,350) (Decrease/increase in trade payables (4,702,919) 2,015,695 Increase in other current liabilities 57,158 182,186 Corporate income tax paid (1,563,485) (536,326) Net cash provided by operating activities 6,731,325 9,053,614 Capital expenditures (4,227,547) (2,891,865) Proceeds from disposals of intangible assets and property, plant and equipment 34,168 395,845 Acquired subsidiaries (200) (263,856) Acquired associated companies and joint ventures Purchase of available-for-sale financial assets 56 (29,679) (2) Net cash inflow on sale of subsidiary undertakings Short-term loans repaid, net 7,229 876,116 1,377,293 Interest received and other financial income Dividends received and income from the decrease of share capital Net cash used in investing activities 2008 2007 Notes SKK 000s SKK 000s 68,293 154,345 1,526,861 105,973 (1,722,311) (1,144,715) Proceeds from long-term bank borrowings 2,000,000 Repayments of long-term bank borrowings (2,000,000 Proceeds from/[repayments of) short-term bank borrowings, net 32,763 (85.200 Net proceeds from short-term nonbank borrowings 6,698 Net proceeds/payments) from derivative transactions Interest paid and other financial costs 23 39,125 20,542 (40,118) (8,051) Dividends paid to shareholders of the parent company Dividends paid to minority shareholders Net cash used in financing activities (Decrease/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Effects of exchange rate changes Cash and cash equivalents at the end of the period Required (5,419,287) (7,367,795) (83,422) (112,735) (5,470,939) (7,587,625) (461,925) 321,274 11 1,935,789 1,672,716 (66,064) (58,201) 11 1,407,800 1,935,789 (a) What are the company's major sources of cash? (b) What are the company's major uses of cash? (c) Were "depreciation, depletion, amortization and impairment" sources or uses of cash in each of the two years shown? Explain. (d) Does the company's productive capacity appear to be increasing or declining in each of the two years depicted on the statement? Support your answer. (e) Were the components of the working capital requirement a net source or use of cash in the most recent year? Support your answer. (f) What does the amount (42 350) shown in the 2008 column (i.e., the fourth line item) refer to? Explain. (g) What is your overall assessment of the company's situation (e.g., its apparent lifecycle stage, recent performance, changes to its financial structure, etc.) for the years presented