Question
Exhibit contains cash-flow statements from Gamma Corporation. The CF statement has three years of data. Examine the contents of these cash-flow statements carefully. Answer the
Exhibit contains cash-flow statements from Gamma 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 3 Gamma Corporation, Consolidated Statements of Cash Flows (S thousand) Years Ended June 29, June 30, July 1, 2015 2016 2014 Cash Flows from Operating Activities Net income/(loss) 617,42 $74,393 $1,072,610 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities Depreciation and amortization Other adiustments to income (IncreaseVdecrease in accounts receivable (IncreaseVdecrease in inventories (Increase/decrease in prepaid expenses Increase/(decrease) in accounts payable (Decrease) in taxes Increase in deferred revenues and customer advances Increase in restructuring reserve Increase in other liabilities Total adiustments Net cash flows from operating activities 828,560796,201 686,738 49,702 105,977(241,357) (373,248) 18,61699,743(62,942) 47,239) (90,602)18,965 (17,694)107,00130,645 105,614) (201,560) (75,502) 105,847 189,077 92,329 92,222 69,207 593,160 443.544 1.263 285, 175 26,576 1,658,3281,359,681 406,781 1,040,901 1,434,074 1,479,391 Cash Flows from Investing Activities: Purchase of plant, property, and equipment (Increase) of other assets, net Purchase of Kienzle business (737,548) (1,027,625) (1,223,038) (55,782) (75,489) (67,624) 233,261 Net cash flows from investing activities Net cash flows from operating and investing activities 1026,591) (1 103,114) (1.290,662) 14,310 330,960 188,729 Net Flows from Financing Activities Proceeds from issuance of deb Pavments to retire debt Purchase of treasury shares Issuance of treasury shares, including tax benefits Net cash flows from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 14,2497,661 40,425 (112,426) (20,896) (153,245) (240,719) (270,231) (814,958) 239,653 296,225 230,733 22,759(697,045 (84,933) 353,719 (508,316) 2,008,983 1,655,2642,163,580 $1,924,050 $2,008,983 $1,655,264 99,243Step by Step Solution
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