Financial Statement Analysis Case 1: Analysis of Operating Cash Flows Your assignment is to analyze Pfizer's Inc, operating cash flows and compare it to that of Johnson \& John. son. Use Pfizer's statement of cash flows and the following information to address these questions: a. What is Pfizer's net cash provided by operating activities each year? What was the change and pereentage of change in Pfizer's net cash provided by operating activities each year? Compare the changes in net cash provided by operating activities to the changes in net income. b. What are Pfizer's major adjustments for noncash expenses and losses? What are the major adjustments for noncash revenues and gains? c. For each year, compute and comment on the following cash coverage ratios for Pfizer: - Short-term debt coverage - Debt coverage - Dividend coverage - Sales coverage - OCF to income ratio d. For each year, compute and comment on Pfizer's free cash flows. Compare its free cash flows to its operating cash flows. e. Using Johnson \& Johnson's information from Example 22.16 in the text, compare Pfizer and Johnson \& Johnson's cash coverage ratios and free cash flows. Additional Information " For the Year-Ended or at the Year-End (in millions) Pliser lnc, and Subsidiary Componies Censolidated Stateenents of Cosh Flows [millions] Year Ended December 31, 2016, 2015, and 2014 Operating Activites Net income before alocation to noncontroling interests Adiustiments to reconcle net income before allocation to 57246=56,966 59,160 noncontroling internste to not cash provided by aperating activitios: Oeprecstion and arnortization Aaset write-olts and mpaiment Foreign currency loss related to Venezuela Gairyliessi on disposal of discontinued operations Wriqe-fown of HiS net assets to fair value less estimated costs to sell Deterred taxes from centinuno coerationa Dolerred tares from discominued operations Sharo besed compensation expense Benefit pian contributions in excess ot expense Other adjustments, net Other changes in assets and labilities, net of acquititions and oivestitures. Trade accounts recemable Imventones Ouber assets Trade accounte parable Other lubil4iesia) Other tax socounts. net Net cash provided by operating activites Investing Activties Purchases of property, plant and bqupment imvestments with original maturites of three manths of less Purchases of long-term investments Procesds from redemptionshases of lang -erm investments Acquisitions of businesses, net of cash acouited Acquisitons of intang ble assets Other investing activies, net Net cash used in inveating activites Financing Actisios Proceods fram thort-term bocrowing Principal payments on shert term borrowings Net proceeds fromviperments on) short teem bonowings with. originat maturties of three months or lest Proceeds trem issuance ot iong-tarm debt Principai parments on longterm debt Purchases of common stock Cash dividends paid Proceeds from exercise of stock options Other financing activities, netial Nat eash used in finaneing octvites Elfect of exchenge-ate chenges on cash and cash equlualents Net incrosselldecreasel in cash and ch oquivilents Cash and cash tquivaionts, beoinnng Cash and cash equvaients and Sefaultaapi: Financial Statement Analysis Case 1: Analysis of Operating Cash Flows Your assignment is to analyze Pfizer's Inc, operating cash flows and compare it to that of Johnson \& John. son. Use Pfizer's statement of cash flows and the following information to address these questions: a. What is Pfizer's net cash provided by operating activities each year? What was the change and pereentage of change in Pfizer's net cash provided by operating activities each year? Compare the changes in net cash provided by operating activities to the changes in net income. b. What are Pfizer's major adjustments for noncash expenses and losses? What are the major adjustments for noncash revenues and gains? c. For each year, compute and comment on the following cash coverage ratios for Pfizer: - Short-term debt coverage - Debt coverage - Dividend coverage - Sales coverage - OCF to income ratio d. For each year, compute and comment on Pfizer's free cash flows. Compare its free cash flows to its operating cash flows. e. Using Johnson \& Johnson's information from Example 22.16 in the text, compare Pfizer and Johnson \& Johnson's cash coverage ratios and free cash flows. Additional Information " For the Year-Ended or at the Year-End (in millions) Pliser lnc, and Subsidiary Componies Censolidated Stateenents of Cosh Flows [millions] Year Ended December 31, 2016, 2015, and 2014 Operating Activites Net income before alocation to noncontroling interests Adiustiments to reconcle net income before allocation to 57246=56,966 59,160 noncontroling internste to not cash provided by aperating activitios: Oeprecstion and arnortization Aaset write-olts and mpaiment Foreign currency loss related to Venezuela Gairyliessi on disposal of discontinued operations Wriqe-fown of HiS net assets to fair value less estimated costs to sell Deterred taxes from centinuno coerationa Dolerred tares from discominued operations Sharo besed compensation expense Benefit pian contributions in excess ot expense Other adjustments, net Other changes in assets and labilities, net of acquititions and oivestitures. Trade accounts recemable Imventones Ouber assets Trade accounte parable Other lubil4iesia) Other tax socounts. net Net cash provided by operating activites Investing Activties Purchases of property, plant and bqupment imvestments with original maturites of three manths of less Purchases of long-term investments Procesds from redemptionshases of lang -erm investments Acquisitions of businesses, net of cash acouited Acquisitons of intang ble assets Other investing activies, net Net cash used in inveating activites Financing Actisios Proceods fram thort-term bocrowing Principal payments on shert term borrowings Net proceeds fromviperments on) short teem bonowings with. originat maturties of three months or lest Proceeds trem issuance ot iong-tarm debt Principai parments on longterm debt Purchases of common stock Cash dividends paid Proceeds from exercise of stock options Other financing activities, netial Nat eash used in finaneing octvites Elfect of exchenge-ate chenges on cash and cash equlualents Net incrosselldecreasel in cash and ch oquivilents Cash and cash tquivaionts, beoinnng Cash and cash equvaients and Sefaultaapi