Prepare a direct-method operating section of the statement of cash flows for 1997 using the information available in the balance sheet and income statement (Exhibits 3 and 4), as well as the supplementary cash flow information (Exhibit 5). The below-attached template on the following page may be useful in answering this question. Be sure to explain your answers in summary form and list the additions/subtractions and where from the income statement and balance sheet these numbers are being pulled from for your final calculation (explain your logic).

TEMPLATE BELOW:

Income Statement			Adjustments			Cash Flow (Direct-method)
Net sales	147,758	+/–			=	Cash from Customers
Cost of sales	–118,945	+/–			=	Cash Paid for Inventory
Marketing and sales	–38,964	+/–			=	Cash paid for marketing
Product development	–12,485	+/–			=	Cash paid for product dev.
General and administrative	–1,831	+/–			=	Cash flow paid for G&A
Interest income	1,898	+/–			=	Interest received
Interest expense	–279	+/–			=	Interest Paid
Depr. and amort.	–3,388	+/–			=
Amort. of compensation	–1,354	+/–			=
Net Loss	–27,590					CFO

(Note that the template disaggregates total “General and administrative expenses” reported in the Statement of Operations into three categories: (i) General and administrative, (ii) Depreciation and amortization, and (iii) Amortization of compensation)
 
 
 

Exhibit 3: 1997 Income Statement Net sales... Cost of sales.. Gross profit..... Operating expenses: Marketing and sales.. Product development... General and administrative. STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) AMAZON.COM, INC. Total operating expenses. Loss from operations.. Interest income... Interest expense. Net loss.... Pro forma basic and diluted loss per share.. Shares used in computation of pro forma basic and diluted loss per share.... YEARS ENDED DECEMBER 31, 1997 L $147,758 118,945 28,813 38,964 12,485 6,573 58,022 (29,209) 1,898 (279) $ (27,590) === ===== $ (1.27) 21, 651 1996 $15,746 12,287 3,459 6,090 2,313 1,035 9,438 (5,979) 202 -- == $ 18,544 1995 511 409 102 200 171 35 = $ (5,777) $ (303) == ===== $ (0.31) 406 (304) 1 ======= $ (0.02) ==== 14,394