PB-56. Interpreting the Statement of Cash Flows Following is the statement of cash flows of Amgen Inc. AMGEN INC. CONSOLIDATED STATEMENTS OF CASH FLOWS 2018 2017 2016 $ 8,394 1,946 311 $ 1,979 1,955 329 (1,330) 334 $ 7,722 2,105 311 183 32 (363) 386 For Years Ended December 31, $ millions Cash flows from operating activities Net income Depreciation and amortization Stock-based compensation expense Deferred income taxes Other items, net Changes in operating assets and liabilities, net of acquisitions: Trade receivables, net Inventories Other assets Accounts payable Accrued income taxes, net Long-term tax liabilities Other liabilities Net cash provided by operating activities (378) (3) 35 (143) (361) 258 1,214 (58) 133 (24) 424 523 6,681 231 (214) (80) (128) (44) (301) 445 323 11,296 11,177 10,354 (18,741) 28,356 5,412 (738) 195 (145) 14,339 (33,607) 24,240 6,174 (664) (19) (148) (4,024) (28,094) 17,958 2,459 (738) (243) (8,658) Cash flows from investing activities Purchases of marketable securities Proceeds from sales of marketable securities Proceeds from maturities of marketable securities Purchases of property, plant and equipment Cash acquired in acquisition, net of cash paid Other Net cash used in investing activities Cash flows from financing activities Net proceeds from issuance of debt. Repayment of debt.. Repurchases of common stock.. Dividends paid Withholding taxes arising from shares withheld for share-based payments.. Other Net cash used in financing activities.. Increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period. . Cash and cash equivalents at end of period (1,121) (17,794) (3,507) (126) 58 4,476 (4,405) (3,160) (3,365) (191) 51 7,318 (3,725) (2,965) (2,998) (260) 31 (6,594) (22,490) 3,145 3,800 559 3,241 (2,599) (903) 4,144 $ 6,945 $ 3,800 $ 3,241 Required a. What does Amgen report as net cash from operating activities in 2018? What is net income for the year? Much of this difference is the result of depreciation. Why is Amgen adding depreciation to net income in the computation of operating cash flows? b. In determining cash provided by operating activities, Amgen adds $311 million relating to stock-based compensation expense in 2018. What is the purpose of this addition? c. Amgen reports $(378) million relating to trade receivables. What does the negative sign on this amount signify about the change in receivables during the year compared with the negative sign on accounts payable in 2018? d. Calculate and compare operating cash flow with current liabilities and operating cash flow with capital expenditures for 2018 and 2017. Current liabilities were $13,488 million, $9,020 million, and $11,204 million at the end of 2018, 2017, and 2016, respectively. e. Does the composition of Amgen's cash flow present a "healthy picture for 2018? Explain