Exhibit contains cash-flow statements from Alpha Corporation. The CF statement has three years of data. Examine the contents of these cash-flow statements carefully. Answer the following questions about EACH OF THREE YEARS of CF statements.

1. For each of the years on the Statement of CFs: a. What were the firms major sources of cash? Its major uses of cash? b. Was CF from operations greater than or less than net income? Explain in detail the major reasons for the difference between these two figures? c. Was the firm able to generate enough cash from operations to pay for all its capital expenditures? d. Did the CF from operations cover both the capital expenditures and the firms dividend payments, if any? e. If it did, how did the firm invest its excess cash? f. If not, what were the sources of cash the firm used to pay for the capital expenditures and/or dividends? g. Were the working capital (current asset or current liability) accounts other than cash and cash equivalents primarily sources of cash, or uses of cash? h. What other major items affected cash flows?

2. What was the trend in: a. Net income? b. Cash flow from (continuing operations? c. Capital expenditures? d. Dividends? e. Net borrowing (proceeds less payments of short- and long-term debt)? f. Working capital accounts?

3. Based on the evidence in the Statement of CFs alone, what is your assessment of the financial strength of this business? Why?

Exhibit 1 Alpha Corporation, Consolidated Statements of Cash Flows ($ millions)
	Year Ended June 30,
	1991	1990	1989
Operating Activities
Loss from continuing operations	($377.9)	($623.5)	($320.6)
Depreciation	168.4	220.1	263.4
Amortization of capitalized software	41.4	58.2	39.1
Gain from sale of investments and other assets	(16.6)	(119.0)
Restructuring and other unusual items, net	135.5	384.1	125.3
Changes in other accounts affecting operations
Accounts receivable	160.8	73.4	(45.2)
Inventory	80.2	100.9	(3.0)
Other current assets	17.0	(1.2)	(13.0)
Accounts payable and other current liabilities	(91.3)	(21.3)	41.0
Other	2.8	14.1	(10.5)
Net cash provided by continuing operations	120.3	85.8	76.5
Net cash provided by (used in) discontinued operations	4.9	3.5	(29.7)
Net cash provided by operating activities	125.2	89.3	46.8
Investing Activities
Investment in depreciable assets	(129.7)	(174.4)	(303.6)
Proceeds from disposal of depreciable and other assets	157	242	94.1
Proceeds from the sale of discontinued operations	25.3	407.3
Investment in capitalized software	(27.8)	(43.1)	(59.5)
Other	(6.0)	(13.0)	14.2
Net cash provided by (used in) investing activities	18.8	418.8	(254.8)
Financing Activities
(Decrease) increase in short-term borrowings	(2.6)	(222.6)	139.8
Proceeds from long-term debt	44.4	167.7	305
Payments of long-term debt	(126.5)	(544.8)	(91.7)
Proceeds from sale of Class B common stock	5.0	8.7	17.5
Purchase of treasury stock	(0.3)	(0.6)	(18.8)
Dividends paid	-	(7.2)	(26.0)
Net cash provided by (used in) financing activities	(80.0)	(598.8)	325.8
Effect of changes in foreign exchange rates	0.1	1.1	(3.9)
Increase (decrease) in cash equivalents	64.1	-89.6	113.9
Cash and equivalents at beginning of year	169.1	258.7	144.8
Cash and equivalents at end of year	$233.2	$169.1	$258.7

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