1. Examine the information in relation to cash flow from operating activities, cash flow from investing activities and cash flow from financing activities retrieved from the Newcrest Mining and Fortescue Metals Group financial reports and undertake a written analysis of the cash flow statement information given for Newcrest Mining and Fortescue Metals Group. Include in this analysis the computations of measuring Working Capital Ratio, Cash Flow Adequacy Ratio (Liquidity), Debt to Total Assets Ratio, Debt Coverage Ratio (Solvency), and the Cash Flow to Sales Ratio (Profitability). Comment on your findings related to these ratios.

2. Based on the analysis, you are required to make conclusions and recommendation which will answer the following questions:
   1. Which business would you expect to be a better short-term credit risk?
   2. Do you think both companies have adequate cash resources?
   3. Assess both companies ability to survive in the longer term.
   4. Which company is better at generating cash from their sales revenue?

NewCrest

Fores

Fortescue

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2018 2018 2017 USSM Note USSM Cash flows from operating activities Profit before income tax 327 483 Adjustments for: Depreciation and amortisation Significant items 510 791 689 6 333 104 5le) 132 Net finance costs 114 Exploration expenditure written off Share of loss of associate Other non-cash items or non-operating items Change in working capital Operating cash flows before interest and taxes Interest received 60 53 18 (27) 1,606 142 1,621 7 2 (122) (34) (110) (69) 1,434 Interest paid Income tax paid Net cash provided by operating activities Cash flows from investing activities Payments for plant and equipment Assets under construction, development and feasibility expenditure Production stripping expenditure Exploration and evaluation expenditure Information systems development Proceeds from sale of property, plant and equipment Payments for investments in associates Cash inflow/(outflow) on sale of subsidiary, net of cash held by the subsidiary Net cash used in investing activities Cash flows from financing activities Proceeds from borrowings 1467 (217) (160) (150) (72) (14) (286) (193) (90) (58) (13) 2 (63) (27) (728) (275) 30 48 (833) 20(e) Bilateral bank debt 295 Repayment of borrowings: 20(e) 20(e) 20(e) (320) (125) (20 (19) Bilateral bank debt Private placement notes Bank loan (11) Payment for treasury shares Dividends paid: Members of the parent entity Non-controlling interests Net cash used in financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 23 (105) (24) (140) (105) (6) (300) 439 461 492 53 953 492 The above Statement should be read in conjunction with the accompanying notes n m 10 20 67 Rnancal Report Consolidated statement of cash flows For the year ended 30 June 2018 2018 2017 Note UsSm US$m Cash flows from operating activities 6,718 Cash receipts from customers 8768 3744 Payments to suppliers and employees 8,687 3,031 5,024 Cash generated from operations 19 24 Interest received 392) Interest paid (412) (375) Income tax paid 8062) Net cash inflow from operating activities 1,601 4,256 Cash flows from investing activities Payments for property, plant and equipment-Fortescue Payments for property, plant and equipment-joint operations (890) (716) (11) (13) Contributions from joint venture partners 4 12 Proceeds from disposal of plant and equipment 16 2 Purchase of financial assets (55) Net cash outflow from investing activities (936) 715) Cash flows from financing activities Proceeds from borrowings and finance leases Repayment of borrowings and finance leases 2,071 1734 2,545) (4,187 (254) Finance costs paid (47) (755) Dividends paid (874) Purchase of shares by employee share trust (24) (27) Net cash outflow from financing activities (1,626) B282) Net (decrease) increase in cash and cash equivalents (961) 259 Cash and cash equivalents at the beginning of the year Effects of exchange rate changes on cash and cash equivalents 1,838 1,583 (14) 4) Cash and cash equivalents at the end of the year 9(b) 863 1,838 Non-cash investing and financing activities are disclosed in note 9( The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. @E CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2018 2018 2017 USSM Note USSM Cash flows from operating activities Profit before income tax 327 483 Adjustments for: Depreciation and amortisation Significant items 510 791 689 6 333 104 5le) 132 Net finance costs 114 Exploration expenditure written off Share of loss of associate Other non-cash items or non-operating items Change in working capital Operating cash flows before interest and taxes Interest received 60 53 18 (27) 1,606 142 1,621 7 2 (122) (34) (110) (69) 1,434 Interest paid Income tax paid Net cash provided by operating activities Cash flows from investing activities Payments for plant and equipment Assets under construction, development and feasibility expenditure Production stripping expenditure Exploration and evaluation expenditure Information systems development Proceeds from sale of property, plant and equipment Payments for investments in associates Cash inflow/(outflow) on sale of subsidiary, net of cash held by the subsidiary Net cash used in investing activities Cash flows from financing activities Proceeds from borrowings 1467 (217) (160) (150) (72) (14) (286) (193) (90) (58) (13) 2 (63) (27) (728) (275) 30 48 (833) 20(e) Bilateral bank debt 295 Repayment of borrowings: 20(e) 20(e) 20(e) (320) (125) (20 (19) Bilateral bank debt Private placement notes Bank loan (11) Payment for treasury shares Dividends paid: Members of the parent entity Non-controlling interests Net cash used in financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 23 (105) (24) (140) (105) (6) (300) 439 461 492 53 953 492 The above Statement should be read in conjunction with the accompanying notes n m 10 20 67 Rnancal Report Consolidated statement of cash flows For the year ended 30 June 2018 2018 2017 Note UsSm US$m Cash flows from operating activities 6,718 Cash receipts from customers 8768 3744 Payments to suppliers and employees 8,687 3,031 5,024 Cash generated from operations 19 24 Interest received 392) Interest paid (412) (375) Income tax paid 8062) Net cash inflow from operating activities 1,601 4,256 Cash flows from investing activities Payments for property, plant and equipment-Fortescue Payments for property, plant and equipment-joint operations (890) (716) (11) (13) Contributions from joint venture partners 4 12 Proceeds from disposal of plant and equipment 16 2 Purchase of financial assets (55) Net cash outflow from investing activities (936) 715) Cash flows from financing activities Proceeds from borrowings and finance leases Repayment of borrowings and finance leases 2,071 1734 2,545) (4,187 (254) Finance costs paid (47) (755) Dividends paid (874) Purchase of shares by employee share trust (24) (27) Net cash outflow from financing activities (1,626) B282) Net (decrease) increase in cash and cash equivalents (961) 259 Cash and cash equivalents at the beginning of the year Effects of exchange rate changes on cash and cash equivalents 1,838 1,583 (14) 4) Cash and cash equivalents at the end of the year 9(b) 863 1,838 Non-cash investing and financing activities are disclosed in note 9( The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. @E