P11-57. Interpreting the Statement of Cash Flows LO Following is the statement of cash flows of Thermo Fisher Scientific. THERMO FISHER SCIENTIFIC INC. Consolidated Statement of Cash Flows For Year Ended December 31, $ millions 2018 Operating Activities Net Income . . . . $2,938 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization . 2,267 Change in deferred income taxes. . .. . (379) Noncash stock-based compensation. 181 Other noncash expenses, not... . . . . . . 106 Changes in assets and liabilities, excluding the effects of acquisitions: Accounts receivable . . (366) Inventories . . . . . . (324) Other assets .. 54 Accounts payable . . 201 Other liabilities . . . . . (42) Contributions to retirement plans .. 193) Net cash provided by operating activities 4.543 Investing Activities Acquisitions, not of cash acquired . . . . . . . . . . . . (536) Purchase of property, plant and equipment........... .. ......:: (758) Proceeds from sale of property, plant and equipment 50 Other investing activities, net . . . . . . 19) Net cash used in investing activities. (1,253) Financing Activities Net proceeds from issuance of debt. . . . . 690 Repayment of debt. .. ... (2,052) Proceeds from issuance of commercial paper . . . . 5,060 Repayments of commercial paper . . . . . . . . (5,254) Purchases of company common stock. . . (500) Dividends paid .... . . . .. (266) Net proceeds from issuance of company common stock under employee stock plans. . . 136 Other financing activities . . (51) Net cash (used in) provided by financing activities. . . (2,237) Exchange Rate Effect on Cash . .. . . . . (297) Increase in Cash, Cash Equivalents and Restricted Cash. . . . . 756 Cash, Cash Equivalents and Restricted Cash at Beginning of Period. . .. 1,361 Cash, Cash Equivalents and Restricted Cash at End of Period. . . $2,117 Required a. What amounts does the company report for net income and cash from operating activities? What one item explains most of this difference? Why does the company add these amounts in the com- putation of operating cash flows? b. Thermo Fisher Scientific reports a positive amount of $181 million relating to noncash stock-based compensation. What does this positive amount signify? c. Thermo Fisher Scientific reports a cash outflow of $758 million relating to the acquisition of PPE. Is this cash outflow a cause for concern? Explain. Did the company dispose of any PPE during 2018? How do we know? d. Thermo Fisher Scientific's net cash flows from financing activities is $(2,237) million. For what purposes is Thermo Fisher Scientific using this cash? e. Calculate the operating cash flow to current liabilities ratio and the operating cash flow to capital expenditures ratio. Current liabilities were $6.147 million in 2018 and $7,048 million in 2017. What do these ratios measure? f. The cash balance increased by $756 million during the year. Does Thermo Fisher Scientific present a "healthy" cash flow picture for the year? Explain
