PB-49. Interpreting the Statement of Cash Flows Following is the statement of cash flows for Stryker Corp. $3,553 306 417 119 23 16 (1,582) (60) (385) 116 289 (90) (156) 44 2,610 STRYKER CORPORATION Consolidated Statements of Cash Flows For Year Ended December 31, 2018 ($ millions) Operating activities Net earnings (loss)... Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation Amortization of intangible assets Share-based compensation Recall charges, net of insurance proceeds Sale of inventory stepped up to fair value at acquisition Deferred income tax benefit (expense) Changes in operating assets and liabilities Accounts receivable Inventories Accounts payable Accrued expenses and other liabilities Recall-related payments Income taxes. Other, net .. Net cash provided by operating activities. Investing activities Acquisitions, net of cash acquired Purchases of marketable securities Proceeds from sales of marketable securities Purchases of property, plant and equipment Other investing, net Net cash used in investing activities. . Financing activities Proceeds and payments on short-term borrowings, net. Proceeds from issuance of long-term debt. Payments on long-term debt Dividends paid .. Repurchase of common stock . Cash paid for taxes from withheld shares Payments to purchase noncontrolling interest Other financing, net Net cash provided by (used in) financing activities. . Effect of exchange rate changes on cash and cash equivalents Change in cash and cash equivalents ... Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year. (2,451) (226) 394 (572) (2) (2,857) (1) 3,126 (669) (703) (300) (120) (14) 10 1,329 (8) 1,074 2,542 $3,616 Required a. Why does the company add back depreciation to compute net cash flows from operating activities? b. Explain why the change in accounts receivable and inventories are reported as adjustments to net earn- ings. Did the accounts receivable and inventories balances increase or decrease during the year? c. Stryker reports that it invested $572 million in property, plant and equipment. Is this an appropriate type of expenditure for the company to make? What relation should expenditures for PPE have with deprecia- tion expense? d. Stryker paid $300 million to repurchase its common stock in fiscal 2018 and, in addition, paid dividends of $703 million. Thus, it paid $1,003 million of cash to its stockholders during the year. How do we evaluate that use of cash relative to other possible uses for the company's cash? e. Provide an overall assessment of the company's cash flows for fiscal 2018. In the analysis, consider the sources and uses of cash