must create a cash flow for both company 1 and 2 for the most current year.

- Using the income statements and balance sheets below: 1. Cash Flow practice: Complete a cash flow statement for both companies for 2010. Hints: The balance sheets only give you net long term assets, but you can derive the change in gross long term assets (needed for the cash flow statement) by taking the change in net long term assets and adding to it current year depreciation, amortization or write downs. When completing the cash flow statement: 6 only a subset of short term assets or liabilities go into cash from operations (no long term assets or liabilities). Cash flow for investments would include change in gross tong term assets and marketable securities (also called short term investments). It may also include change in other long term assets. (we will have to assume these are other type of strategic investments) Cash flow from financing includes debt, equity, dividends and perhaps other long term liabilities (we will have to assume these may be debt items). INCOME STATEMENT ($ in millions) Company 1 2009 2010 $42,905 $65,225 Company 2 2009 2010 $114,552 $126,033 Net Revenue COGS 24,213 37,611 83,687 92,085 Gross Profit $18,692 $27,614 $30,865 $33,948 Operating Expenses: Research and Development Sales, General and Administrative Total Operating Expenses 1,333 4,149 1,782 5,517 2,819 11,613 2,959 12,585 5,482 7,299 14,432 15,544 EBITDA $13,210 $20,315 $16,433 $18,404 Depreciation and Amortization Other Non-Cash Expenses (Goodwill Write down) 734 736 1,027 903 4.780 635 4,820 668 11,740 18,385 EBIT 11,018 12,916 Interest Expenses (Income) Other Non-Operating Expenses (income) 0 326 0 - 155 0 721 0 505 12,066 18,540 10,297 12,411 Net Income Before Taxes 3,831 4,527 1.755 2,213 Tax Expense 8,235 14,013 8,542 10.198 Net Income BALANCE SHEET (S in millions) Company 1 2009 2010 Company 2 2009 2010 Assets Cash Short term Investments Accounts Receivable Inventory Other Current Assets $5,263 18,201 5,057 455 2,579 $11,261 14,359 9,924 1,051 5,083 $13,279 $10,929 55 5 19,212 21,467 6,128 6,466 13,865 15,317 Total Current Assets 531,555 $41,678 $52,539 $54,184 Property Plant and Equipment (Net) Goodwill (Net) Purchased Intangible Assets (Net) Other long-term assets (Net) $2,954 206 247 12,539 $4,768 741 342 27,654 $11,262 33,109 6,600 11,289 $11,763 38,483 7,848 12,225 Total Long Term Assets $15.946 $33,505 $62,260 $70,319 Total Assets $47 501 $75,183 $114.799 $124.503 $5,601 3,852 Liabilities Shareholders' Equity Accounts Payable Accrued Expenses Notes payable and short-term borrowings Deferred Revenue Other short-term liabilities Total Current Liabilities $12,015 5,723 0 2.984 $14,809 4,071 1,850 6,182 16,091 $14,365 4,256 7,046 6,227 17.009 2,053 0 $11.506 $20,722 $43,003 $49,403 Long term Debt Other long-term liabilities 0 4,355 0 6,670 13.980 17,052 15,258 19,061 Total Liabilities $15,861 $27,392 $74,035 $83,722 Preferred Stock Common Stock Additional paid in capital Retained Earings 0 8,210 0 23,430 0 10.668 0 37.123 O 24 14.051 26,689 0 22 11.901 28 858 Total Shareholders' Equity $31.540 $47,791 $40,764 $40,781 Total Liabilities and Shareholders' Equity 547 501 $75,183 5114,799 $124,503