I am having a hard time identifying the capital expenditures and cash dividend in the statements to calculate the free cash flow and I am not really sure how to answer the question of the conclusion.

a.) Based on the information contained in these financial statements, compute free cash flow for Amazon at December 31, 2016 and Wal-Mart for January 31, 2017.

b.) What conclusions concerning the management of cash can be drawn from free cash flow for each company?

Attached is the question a. and b. and the annex for each statement.

Wal-Mart Stores, Inc. Consolidated Statement of Income Fiscal Year Ended nuary 31 2017 2016 2015 $478.614 3,516 482,130 $182.229 3422 485,651 $481,317 4,556 485,873 361,256 101,853 22,764 360,984 97,041 24.105 365,086 93,418 27,147 (Amounts in millions, except per shore data) Revenues: Net sales Membership and other income Total revenues Costs and expenses: Cost of sales Operating, selling general and administrative expenses Operating income Interest: Debt Capital lease and financing obligations Interest income Interest, net Income from continuing operations before income taxes Provision for income taxes Income from continuing operations Income from discontinued operations, net of income taxes Consolidated net income Consolidated net income attributable to noncontrolling interest Consolidated net income attributable to Walmart Basic net income per common share: Basic income per common share from continuing operations attributable to Walmart Basic income per common share from discontinued operations attributable to Walmart Basic net income per common share attributable to Walmart Diluted net income per common share: Diluted income per common share from continuing operations attributable to Walmart Diluted income per common share from discontinued operations attributable to Walmart Diluted net income per common share attributable to Walmart Weighted average common shares outstanding: 2,044 323 (100) 2,267 20.497 6,204 14.293 2,027 521 (81) 2.467 21638 6.558 15.080 2,161 300 (1131 2.348 24.799 7.985 16,814 285 17.000 14.293 (650) $ 13,643 15.080 (386) $ 14694 $ 16,363 $ 4.40 $ 458 $ 5.01 0.06 5.07 $ 4.40 $ 4.58 $ $ 4.38 $ 457 $ 4.99 0.06 5.05 $ $ 457 $ 3230 3,101 3,112 2.00 3.207 3.217 Diluted Dividends declared per common share $ $ 1.90 $ 1.92 See accompanying notes Wal-Mart Stores, Inc. Consolidated Statement of Comprehensive Income Fiscal Years Ended January 31, Amounts in millions) 2017 2016 2015 Consolidated net income $14,293 $15,080 $17,099 Less consolidated net income attributable to nonredeemable noncontrolling interest (650) (386) (736) Consolidated net income attributable to Walmart 13,643 14,694 16,363 Other comprehensive income (loss), net of income taxes Currency translation and other (2,882) 15,220) (4.558) Net investment hedges 413 366 379 Cash flow hedges 21 (202) (470) Minimum pension liability (397) 86 169) Other comprehensive income (loss), net of income taxes (2,845) (4,970) (4.718) Less other comprehensive income loss) attributable to nonredeemable non controlling interest 210 541 Other comprehensive income (loss) attributable to Walmart (2,635) (4.429 (4.172) Comprehensive income, net of income taxes 11,448 10,110 12381 Less comprehensive income floss) attributable to nonredeemable noncontrolling interest (440) 155 (190) Comprehensive income attributable to Walmart $11,008 $10.265 $12.191 See accompanying notes 546 Wal-Mart Stores, Inc. Consolidated Balance Sheets As of January 31, 2017 2016 $ 6,867 5,835 43,046 1,941 $ 8.705 5,624 44,469 1,441 60,239 57,689 Amounts in millions ASSETS Current assets: Cash and cash equivalents Receivables, net Inventories Prepaid expenses and other Total current assets Property and equipment: Property and equipment Less accumulated depreciation Property and equipment, net Property under capital lease and financing obligations: Property under capital lease and financing obligations Less accumulated amortization Property under capital lease and financing obligations, net Goodwill Other assets and deferred charges Total assets 179,492 (71,782) 107,710 176958 (66,787 110,171 11,637 (5,169) 6,468 17,037 9,921 $198,825 11,096 (4.751) 6345 16,695 6,131 $199,581 $ 1,099 41,433 20,654 921 2,256 565 66,928 $ 2,708 38,487 19,607 521 2,745 551 64,619 36,015 6,003 9,344 38.214 5,816 7321 LIABILITIES AND EQUITY Current liabilities: Short-term borrowings Accounts payable Accrued liabilities Accrued income taxes Long-term debt due within one year Capital lease and financing obligations due within one year Total current liabilities Long term debt Long-term capital lease and financing obligations Deferred income taxes and other Commitments and contingencies Equity: Common stock Capital in excess of par value Retained earnings Accumulated other comprehensive loss Total Walmart shareholders' equity Nonredeemable noncontrolling interest Total equity Total liabilities and equity See accompanying notes 305 2,371 89,354 (14,232) 77,798 2,737 80,535 $198,825 317 1,805 90,021 (11,597) 80,546 3,065 83,611 $199,581 Wal-Mart Stores, Inc. Consolidated Statements of Shareholders' Equity and Redeemaole Noncontrolling Interest Nontedeemable Noncontrolling Retained Earings $76566 16,363 Accumulated Total Other Comprehensive Shareholders Loss Equity $ 2,996) $76,255 16,363 Redeemable Total Noncontrolling Equity $81,339 $1,491 17,099 $5,0B4 736 - - - (4.1723 14,172) (546) (4718) - (6,185) 1950) 16,185) (980) (6,185) (980) (1.491) 113 (7.168) 85,777 14,694 81,394 14,694 (731) 4,543 386 (618) 85,937 15,080 - - (4429 (44291 (541) (4970) Capital in Common Stock Excess of Amounts in milions Shares Amount Par Value Balances as of February 1, 2014 3,233 $323 $2362 Consolidated net income Other comprehensive loss net of income taxes Cash dividends declared (5192 per share) Purchase of Company stock (13) (1) (29) Purchase of redeemable noncontrolling interest Other 8 1 129 Balances as of January 31, 2015 3.228 323 2.462 Consolidated net income Other comprehensive loss net of income taxes Cash dividends declared ($1.96 per share) Purchase of Company stock (65) (6 (102) Cash dividend declared to noncontrolling interest Other 1555) Balances as of January 31, 2016 3,162 317 1,805 Consolidated net income Other comprehensive loss, net of income taxes Cash dividends declared ($2.00 per share) Purchase of Company stock (120) (12) (174) Cash dividend declared to noncontrolling interest Other 740 Balances as of January 31, 2017 3,048 $305 $2,371 (6,294) (4.148) 16,294) 14,256) (6,294) (4.256) 18) (691) (632) 3,065 650 (691) (1.195) 83,611 14,293 (563) 80,546 13,643 (11,597) 90,021 13,643 1 (2,635) - 12,635) (210) (2,845) 1 (6,216) (8,090) (6,216) (8,276) (6,216) (8,276) 6 736 (519) (249) $2,737 (519) 487 $80,535 $89,354 $(14,232) $77,798 See accompanying notes Wal-Mart Stores, Inc. Consolidated Statements of Cash Flow Fiscal Years Ended January 31, 2017 2016 2015 $14,293 $ 15,080 $ 17.099 (285) 16,814 14,293 15.080 10,080 761 206 9.454 (672) 1.410 9,173 (503) 785 (402) 1,021 3,942 1,137 492 (19) (703) 2008 1,303 (472) 27389 (569) (1.229) 2678 1.249 166 28.564 31,530 (12,174) (11,477) 635 246 570 671 Amounts in milions) Cash flows from operating activities: Consolidated net income Income from discontinued operations, net of income taxes Income from continuing operations Adjustments to reconcile income from continuing operations to net cash provided by operating activities: Depreciation and amortization Deferred income taxes Other operating activities Changes in certain assets and liabilities, net of effects of acquisitions: Receivables.net Inventories Accounts payable Accrued liabilities Accrued income taxes Net cash provided by operating activities Cash flows from investing activities: Payments for property and equipment Proceeds from the disposal of property and equipment Proceeds from the disposal of certain operations Purchase of available for sale securities Investment and business acquisitions, net of cash acquired Other investing activities Net cash used in investing activities Cash flows from financing activities: Net change in short-term borrowings Proceeds from issuance of long-term debt Payments of long-term debt Dividends paid Purchase of Company stock Dividends paid to noncontrolling interest Purchase of noncontrolling interest Other financing activities Net cash used in financing activities Effect of exchange rates on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Supplemental disclosure of cash flow information: Income taxes paid Interest paid (10,619) 456 662 (1,901) (2,463) (122) (13,987) (192) (10,675) (11,125) 1.235 39 (1,673) 137 (2,055) 16,216) (8,298) (479) (90) (255) (18,929) (6,294) (4.112) (719) (1,326) (513) (6.288) 5.174 (3.904) (6,185) (1,015) 1600) (1844) (409) (16,122) (15,071) (1.022 (514) (452) (1,838) 8,705 $ 6,867 (430) 9,135 $ 8,705 1.854 7,281 $ 9.135 4,507 2,351 8,111 2540 8,169 2,433 See accompanying notes 15.90 2.371 8.116 2.975 (1.426) (167) 5.000 1.724 11.931 09.976 AMAZON.COM, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS in millions) Year Ended December CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 8.6585 14.557 $ OPERATING ACTIVITIES: Net income (loss) 596 Adjustments to reconcile net income oss) tot cash from operating activities: Depreciation of property and equipment, including internal-use software and website development, and other montiration, including capitalized content costs 6.381 Stack-based competitie 1.497 2.119 Other operating expense.net 129 155 Other expense (income), net 250 Deferred income taxes (316) 81 Excess tax benefits from stock based compensation (6) (119) Changes in operating assets and liabilities: Inventories (1.193) (2.187) Accounts receivable, net and other (1,039) (1.755) Accounts payable 1.759 4.294 Accrued expenses and other 706 913 Additions to uncared revenue 443 7.401 Amortization of previously uncanned revenue (6.109 Net cash provided by used in operating activities 6,842 INVESTING ACTIVITIES Purchases of propeny and equipment, including interal-use software and white development, ci (4.893) Acquisitions, net of cash acquired, and other Sales and matures of marketable securities 3,025 Purchases of marketable curities (2.542) Net cash provided by used in) investing activities (5.0/5) (6.450) FINANCING ACTIVITIES: Excess tax benefits from stock-based compensation 119 Proceeds from long-term debt and other 6,359 353 Repayments of long-term dels and other Principal payments of capital case obligations (1.285) (2.462) Principal repayments of finance lease obligations (135) (121) Net cash provided by used in financing activities 4.432 (3.763 Foreign currency effect on cash and cash equivalents (310) (374) Net increase (decrease) in cash and cash equivalents 5 CASH AND CASH EQUIVALENTS, END OF PERIOD 14,357 15.890 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest on long-term debt Cash paid for interest on capital and finance case obligations 153 Cash paid for income taxes, net of refund 177 273 Property and equipment acquired under capital cases 4.00 4.717 Property and cquipment acquired under build-to-sait lases See accompanying notes to consolidated financial statements. 4.733 (7.756) 9.876) 6 829 (354) (2911) (212) 19,334 200 412 5.704 AMAZON.COM, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) 2016 94.665 41,322 135.987 Year Ended December 31. 2014 2015 Net product sales 70,080 79,2685 Net service sales 18.908 27.738 Total net sales 88.988 107.006 Operating expenses: Cost of sales 62,752 71.651 Fulfillment 10,766 13,410 Marketing 4,332 5.254 Technology and content 9.275 12.540 General and administrative 1.552 1.747 Other operating expense, net 133 171 Total operating expenses 88,810 104,773 Operating income 178 2.233 Interest income 39 50 Interest expense (210) (459) Other income (expense), net (118) (256) Total non-operating income (expense) (289) (665) Income (loss) before income taxes (111) 1.568 Provision for income taxes (167) (950) Equity-method investment activity, net of tax 37 (22) Net income (loss) $ (241) S 596 S Basic earnings per share $ (0.52) S 1.28 S Diluted earnings per share $ (0.52) S 1.25 $ Weighted average shares used in computation of earnings per share: Basic 462 467 Diluted 462 477 See accompanying notes to consolidated financial statements. 88.265 17.619 7.233 16,085 2.432 167 131,801 4.186 100 (484) 90 (294) 3,892 (1.425) (96) 2,371 5.01 4.90 474 484 AMAZON.COM, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in millions) 2016 2.371 (279) Year Ended December 31 2014 2015 Net income (loss) (241) 5 596 S Other comprehensive income (loss): Foreign currency translation adjustments, net of tax of S(3), $10, and $(49) (325) (210) Net change in unrealized gains (losses) on available-for-sale securities: Unrealized gains (losses), net of tax of $1, $(5), and S(12) Reclassification adjustment for losses (gains) included in "Other income (expense), net," net of tax of S(1), SO, and SO Net unrealized gains (losses) on available-for-sale securities Total other comprehensive income (loss) Comprehensive income (loss) See accompanying notes to consolidated financial statements. 2 9 5 8 (3) (1) (326) (567) S (2) (212) 384 S 17 (262) 2.109 AMAZON.COM, INC. CONSOLIDATED BALANCE SHEETS (in millions, except per share data) December 31. 2015 2016 15,890 $ 3,918 10.243 5,654 35,705 21,838 3.759 3,445 64,747 $ 19,334 6,647 11,461 8.339 45.781 29,114 3,784 4.723 83,402 ASSETS Current assets: Cash and cash equivalents Marketable securities Inventories Accounts receivable, net and other Total current assets Property and equipment, net Goodwill Other assets Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable Accrued expenses and other Unearned revenue Total current liabilities Long-term debt Other long-term liabilities Commitments and contingencies (Note 7) Stockholders' equity: Preferred stock, 30.01 par value: Authorized shares - 500 Issued and outstanding shares --- none Common stock, 30.01 par value: Authorized shares - 5,000 Issued shares -- 494 and 500 Outstanding shares -- 471 and 477 Treasury stock, at cost Additional paid-in capital Accumulated other comprehensive loss Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 20,397 $ 10.372 3.118 33.887 8.227 9,249 25,309 13,739 4.768 43.816 7.694 12.607 (1.837) 13.394 (723) 2.545 13,384 64.747 (1.837) 17.186 (985) 4,916 19,285 83,402 AMAZON.COM, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (in millions) 1 - - - 1 1 - Cemmen Stock Accumulated Additional Other Total Paid In Comprehensive Retained Stockholders Shares Amount Capital Incones Farning Equity Balance as of January 1, 2014 459 S 5 $ (1,837) $ 9.573 S (185) $ 2.190 S 9,746 Net loss (241) (241) Other comprehensive income (loss) (326) (326) Exercise of common stock options 2 2 Excess tax benefits from stock-based compensation 6 6 Stock-based compensation and issuance of employee benefit plan stock 1.510 1,510 Issuance of common stock for acquisition activity 44 Balance as of December 31, 2014 465 5 (1.837) 11.135 (511) 1.949 10,741 Net income 596 596 Other comprehensive income (loss) (212) (212) Exercise of common stock options 6 4 4 Excess tax benefits from stock-based compensation 119 119 Stock-based compensation and issuance of employee benefit plan stock 2.131 2.131 Issuance of common stock for acquisition activity 5 5 Balance as of December 31, 2015 471 5 (1.837) 13,394 (723) 2.545 13,384 Net income 2.371 2.371 Other comprehensive income (loss) (262) (262) Exercise of common stock options 1 1 Excess tax benefits from stock-based compensation 829 829 Stock-based compensation and issuance of employee benefit plan stock 2.962 2,962 Balance as of December 31, 2016 477 $ SS (1,837) S 17,186 (985) $ 4.916 S 19,285 See accompanying notes to consolidated financial statements. - - - - - 1 - 1 (a) Based on the information contained in these financial statements, compute free cash flow for Amazon at December 31, 2016 and Wal-Mart for January 31, 2017.( sign e.g. -15,000 or in parenthesis e.g. (15,000). Enter amounts in millions.) Amazon.com, Inc. Wal-Mart Stores, Inc. Free cash flow $ Click if you would like to Show Work for this question: Open Show Work (b) What conclusions concerning the management of cash can be drawn from free cash flow for each company? Click if you would like to Show Work for this question: Open Show Work Wal-Mart Stores, Inc. Consolidated Statement of Income Fiscal Year Ended nuary 31 2017 2016 2015 $478.614 3,516 482,130 $182.229 3422 485,651 $481,317 4,556 485,873 361,256 101,853 22,764 360,984 97,041 24.105 365,086 93,418 27,147 (Amounts in millions, except per shore data) Revenues: Net sales Membership and other income Total revenues Costs and expenses: Cost of sales Operating, selling general and administrative expenses Operating income Interest: Debt Capital lease and financing obligations Interest income Interest, net Income from continuing operations before income taxes Provision for income taxes Income from continuing operations Income from discontinued operations, net of income taxes Consolidated net income Consolidated net income attributable to noncontrolling interest Consolidated net income attributable to Walmart Basic net income per common share: Basic income per common share from continuing operations attributable to Walmart Basic income per common share from discontinued operations attributable to Walmart Basic net income per common share attributable to Walmart Diluted net income per common share: Diluted income per common share from continuing operations attributable to Walmart Diluted income per common share from discontinued operations attributable to Walmart Diluted net income per common share attributable to Walmart Weighted average common shares outstanding: 2,044 323 (100) 2,267 20.497 6,204 14.293 2,027 521 (81) 2.467 21638 6.558 15.080 2,161 300 (1131 2.348 24.799 7.985 16,814 285 17.000 14.293 (650) $ 13,643 15.080 (386) $ 14694 $ 16,363 $ 4.40 $ 458 $ 5.01 0.06 5.07 $ 4.40 $ 4.58 $ $ 4.38 $ 457 $ 4.99 0.06 5.05 $ $ 457 $ 3230 3,101 3,112 2.00 3.207 3.217 Diluted Dividends declared per common share $ $ 1.90 $ 1.92 See accompanying notes Wal-Mart Stores, Inc. Consolidated Statement of Comprehensive Income Fiscal Years Ended January 31, Amounts in millions) 2017 2016 2015 Consolidated net income $14,293 $15,080 $17,099 Less consolidated net income attributable to nonredeemable noncontrolling interest (650) (386) (736) Consolidated net income attributable to Walmart 13,643 14,694 16,363 Other comprehensive income (loss), net of income taxes Currency translation and other (2,882) 15,220) (4.558) Net investment hedges 413 366 379 Cash flow hedges 21 (202) (470) Minimum pension liability (397) 86 169) Other comprehensive income (loss), net of income taxes (2,845) (4,970) (4.718) Less other comprehensive income loss) attributable to nonredeemable non controlling interest 210 541 Other comprehensive income (loss) attributable to Walmart (2,635) (4.429 (4.172) Comprehensive income, net of income taxes 11,448 10,110 12381 Less comprehensive income floss) attributable to nonredeemable noncontrolling interest (440) 155 (190) Comprehensive income attributable to Walmart $11,008 $10.265 $12.191 See accompanying notes 546 Wal-Mart Stores, Inc. Consolidated Balance Sheets As of January 31, 2017 2016 $ 6,867 5,835 43,046 1,941 $ 8.705 5,624 44,469 1,441 60,239 57,689 Amounts in millions ASSETS Current assets: Cash and cash equivalents Receivables, net Inventories Prepaid expenses and other Total current assets Property and equipment: Property and equipment Less accumulated depreciation Property and equipment, net Property under capital lease and financing obligations: Property under capital lease and financing obligations Less accumulated amortization Property under capital lease and financing obligations, net Goodwill Other assets and deferred charges Total assets 179,492 (71,782) 107,710 176958 (66,787 110,171 11,637 (5,169) 6,468 17,037 9,921 $198,825 11,096 (4.751) 6345 16,695 6,131 $199,581 $ 1,099 41,433 20,654 921 2,256 565 66,928 $ 2,708 38,487 19,607 521 2,745 551 64,619 36,015 6,003 9,344 38.214 5,816 7321 LIABILITIES AND EQUITY Current liabilities: Short-term borrowings Accounts payable Accrued liabilities Accrued income taxes Long-term debt due within one year Capital lease and financing obligations due within one year Total current liabilities Long term debt Long-term capital lease and financing obligations Deferred income taxes and other Commitments and contingencies Equity: Common stock Capital in excess of par value Retained earnings Accumulated other comprehensive loss Total Walmart shareholders' equity Nonredeemable noncontrolling interest Total equity Total liabilities and equity See accompanying notes 305 2,371 89,354 (14,232) 77,798 2,737 80,535 $198,825 317 1,805 90,021 (11,597) 80,546 3,065 83,611 $199,581 Wal-Mart Stores, Inc. Consolidated Statements of Shareholders' Equity and Redeemaole Noncontrolling Interest Nontedeemable Noncontrolling Retained Earings $76566 16,363 Accumulated Total Other Comprehensive Shareholders Loss Equity $ 2,996) $76,255 16,363 Redeemable Total Noncontrolling Equity $81,339 $1,491 17,099 $5,0B4 736 - - - (4.1723 14,172) (546) (4718) - (6,185) 1950) 16,185) (980) (6,185) (980) (1.491) 113 (7.168) 85,777 14,694 81,394 14,694 (731) 4,543 386 (618) 85,937 15,080 - - (4429 (44291 (541) (4970) Capital in Common Stock Excess of Amounts in milions Shares Amount Par Value Balances as of February 1, 2014 3,233 $323 $2362 Consolidated net income Other comprehensive loss net of income taxes Cash dividends declared (5192 per share) Purchase of Company stock (13) (1) (29) Purchase of redeemable noncontrolling interest Other 8 1 129 Balances as of January 31, 2015 3.228 323 2.462 Consolidated net income Other comprehensive loss net of income taxes Cash dividends declared ($1.96 per share) Purchase of Company stock (65) (6 (102) Cash dividend declared to noncontrolling interest Other 1555) Balances as of January 31, 2016 3,162 317 1,805 Consolidated net income Other comprehensive loss, net of income taxes Cash dividends declared ($2.00 per share) Purchase of Company stock (120) (12) (174) Cash dividend declared to noncontrolling interest Other 740 Balances as of January 31, 2017 3,048 $305 $2,371 (6,294) (4.148) 16,294) 14,256) (6,294) (4.256) 18) (691) (632) 3,065 650 (691) (1.195) 83,611 14,293 (563) 80,546 13,643 (11,597) 90,021 13,643 1 (2,635) - 12,635) (210) (2,845) 1 (6,216) (8,090) (6,216) (8,276) (6,216) (8,276) 6 736 (519) (249) $2,737 (519) 487 $80,535 $89,354 $(14,232) $77,798 See accompanying notes Wal-Mart Stores, Inc. Consolidated Statements of Cash Flow Fiscal Years Ended January 31, 2017 2016 2015 $14,293 $ 15,080 $ 17.099 (285) 16,814 14,293 15.080 10,080 761 206 9.454 (672) 1.410 9,173 (503) 785 (402) 1,021 3,942 1,137 492 (19) (703) 2008 1,303 (472) 27389 (569) (1.229) 2678 1.249 166 28.564 31,530 (12,174) (11,477) 635 246 570 671 Amounts in milions) Cash flows from operating activities: Consolidated net income Income from discontinued operations, net of income taxes Income from continuing operations Adjustments to reconcile income from continuing operations to net cash provided by operating activities: Depreciation and amortization Deferred income taxes Other operating activities Changes in certain assets and liabilities, net of effects of acquisitions: Receivables.net Inventories Accounts payable Accrued liabilities Accrued income taxes Net cash provided by operating activities Cash flows from investing activities: Payments for property and equipment Proceeds from the disposal of property and equipment Proceeds from the disposal of certain operations Purchase of available for sale securities Investment and business acquisitions, net of cash acquired Other investing activities Net cash used in investing activities Cash flows from financing activities: Net change in short-term borrowings Proceeds from issuance of long-term debt Payments of long-term debt Dividends paid Purchase of Company stock Dividends paid to noncontrolling interest Purchase of noncontrolling interest Other financing activities Net cash used in financing activities Effect of exchange rates on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Supplemental disclosure of cash flow information: Income taxes paid Interest paid (10,619) 456 662 (1,901) (2,463) (122) (13,987) (192) (10,675) (11,125) 1.235 39 (1,673) 137 (2,055) 16,216) (8,298) (479) (90) (255) (18,929) (6,294) (4.112) (719) (1,326) (513) (6.288) 5.174 (3.904) (6,185) (1,015) 1600) (1844) (409) (16,122) (15,071) (1.022 (514) (452) (1,838) 8,705 $ 6,867 (430) 9,135 $ 8,705 1.854 7,281 $ 9.135 4,507 2,351 8,111 2540 8,169 2,433 See accompanying notes 15.90 2.371 8.116 2.975 (1.426) (167) 5.000 1.724 11.931 09.976 AMAZON.COM, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS in millions) Year Ended December CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 8.6585 14.557 $ OPERATING ACTIVITIES: Net income (loss) 596 Adjustments to reconcile net income oss) tot cash from operating activities: Depreciation of property and equipment, including internal-use software and website development, and other montiration, including capitalized content costs 6.381 Stack-based competitie 1.497 2.119 Other operating expense.net 129 155 Other expense (income), net 250 Deferred income taxes (316) 81 Excess tax benefits from stock based compensation (6) (119) Changes in operating assets and liabilities: Inventories (1.193) (2.187) Accounts receivable, net and other (1,039) (1.755) Accounts payable 1.759 4.294 Accrued expenses and other 706 913 Additions to uncared revenue 443 7.401 Amortization of previously uncanned revenue (6.109 Net cash provided by used in operating activities 6,842 INVESTING ACTIVITIES Purchases of propeny and equipment, including interal-use software and white development, ci (4.893) Acquisitions, net of cash acquired, and other Sales and matures of marketable securities 3,025 Purchases of marketable curities (2.542) Net cash provided by used in) investing activities (5.0/5) (6.450) FINANCING ACTIVITIES: Excess tax benefits from stock-based compensation 119 Proceeds from long-term debt and other 6,359 353 Repayments of long-term dels and other Principal payments of capital case obligations (1.285) (2.462) Principal repayments of finance lease obligations (135) (121) Net cash provided by used in financing activities 4.432 (3.763 Foreign currency effect on cash and cash equivalents (310) (374) Net increase (decrease) in cash and cash equivalents 5 CASH AND CASH EQUIVALENTS, END OF PERIOD 14,357 15.890 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest on long-term debt Cash paid for interest on capital and finance case obligations 153 Cash paid for income taxes, net of refund 177 273 Property and equipment acquired under capital cases 4.00 4.717 Property and cquipment acquired under build-to-sait lases See accompanying notes to consolidated financial statements. 4.733 (7.756) 9.876) 6 829 (354) (2911) (212) 19,334 200 412 5.704 AMAZON.COM, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) 2016 94.665 41,322 135.987 Year Ended December 31. 2014 2015 Net product sales 70,080 79,2685 Net service sales 18.908 27.738 Total net sales 88.988 107.006 Operating expenses: Cost of sales 62,752 71.651 Fulfillment 10,766 13,410 Marketing 4,332 5.254 Technology and content 9.275 12.540 General and administrative 1.552 1.747 Other operating expense, net 133 171 Total operating expenses 88,810 104,773 Operating income 178 2.233 Interest income 39 50 Interest expense (210) (459) Other income (expense), net (118) (256) Total non-operating income (expense) (289) (665) Income (loss) before income taxes (111) 1.568 Provision for income taxes (167) (950) Equity-method investment activity, net of tax 37 (22) Net income (loss) $ (241) S 596 S Basic earnings per share $ (0.52) S 1.28 S Diluted earnings per share $ (0.52) S 1.25 $ Weighted average shares used in computation of earnings per share: Basic 462 467 Diluted 462 477 See accompanying notes to consolidated financial statements. 88.265 17.619 7.233 16,085 2.432 167 131,801 4.186 100 (484) 90 (294) 3,892 (1.425) (96) 2,371 5.01 4.90 474 484 AMAZON.COM, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in millions) 2016 2.371 (279) Year Ended December 31 2014 2015 Net income (loss) (241) 5 596 S Other comprehensive income (loss): Foreign currency translation adjustments, net of tax of S(3), $10, and $(49) (325) (210) Net change in unrealized gains (losses) on available-for-sale securities: Unrealized gains (losses), net of tax of $1, $(5), and S(12) Reclassification adjustment for losses (gains) included in "Other income (expense), net," net of tax of S(1), SO, and SO Net unrealized gains (losses) on available-for-sale securities Total other comprehensive income (loss) Comprehensive income (loss) See accompanying notes to consolidated financial statements. 2 9 5 8 (3) (1) (326) (567) S (2) (212) 384 S 17 (262) 2.109 AMAZON.COM, INC. CONSOLIDATED BALANCE SHEETS (in millions, except per share data) December 31. 2015 2016 15,890 $ 3,918 10.243 5,654 35,705 21,838 3.759 3,445 64,747 $ 19,334 6,647 11,461 8.339 45.781 29,114 3,784 4.723 83,402 ASSETS Current assets: Cash and cash equivalents Marketable securities Inventories Accounts receivable, net and other Total current assets Property and equipment, net Goodwill Other assets Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable Accrued expenses and other Unearned revenue Total current liabilities Long-term debt Other long-term liabilities Commitments and contingencies (Note 7) Stockholders' equity: Preferred stock, 30.01 par value: Authorized shares - 500 Issued and outstanding shares --- none Common stock, 30.01 par value: Authorized shares - 5,000 Issued shares -- 494 and 500 Outstanding shares -- 471 and 477 Treasury stock, at cost Additional paid-in capital Accumulated other comprehensive loss Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 20,397 $ 10.372 3.118 33.887 8.227 9,249 25,309 13,739 4.768 43.816 7.694 12.607 (1.837) 13.394 (723) 2.545 13,384 64.747 (1.837) 17.186 (985) 4,916 19,285 83,402 AMAZON.COM, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (in millions) 1 - - - 1 1 - Cemmen Stock Accumulated Additional Other Total Paid In Comprehensive Retained Stockholders Shares Amount Capital Incones Farning Equity Balance as of January 1, 2014 459 S 5 $ (1,837) $ 9.573 S (185) $ 2.190 S 9,746 Net loss (241) (241) Other comprehensive income (loss) (326) (326) Exercise of common stock options 2 2 Excess tax benefits from stock-based compensation 6 6 Stock-based compensation and issuance of employee benefit plan stock 1.510 1,510 Issuance of common stock for acquisition activity 44 Balance as of December 31, 2014 465 5 (1.837) 11.135 (511) 1.949 10,741 Net income 596 596 Other comprehensive income (loss) (212) (212) Exercise of common stock options 6 4 4 Excess tax benefits from stock-based compensation 119 119 Stock-based compensation and issuance of employee benefit plan stock 2.131 2.131 Issuance of common stock for acquisition activity 5 5 Balance as of December 31, 2015 471 5 (1.837) 13,394 (723) 2.545 13,384 Net income 2.371 2.371 Other comprehensive income (loss) (262) (262) Exercise of common stock options 1 1 Excess tax benefits from stock-based compensation 829 829 Stock-based compensation and issuance of employee benefit plan stock 2.962 2,962 Balance as of December 31, 2016 477 $ SS (1,837) S 17,186 (985) $ 4.916 S 19,285 See accompanying notes to consolidated financial statements. - - - - - 1 - 1 (a) Based on the information contained in these financial statements, compute free cash flow for Amazon at December 31, 2016 and Wal-Mart for January 31, 2017.( sign e.g. -15,000 or in parenthesis e.g. (15,000). Enter amounts in millions.) Amazon.com, Inc. Wal-Mart Stores, Inc. Free cash flow $ Click if you would like to Show Work for this question: Open Show Work (b) What conclusions concerning the management of cash can be drawn from free cash flow for each company? Click if you would like to Show Work for this question: Open Show Work