Refer to the attached Cash Flow Statements for Firm A and Firm B to answer the following questions. Financial statement information other than that provided is not necessary to answer the questions.

Basic Concepts:

1. If possible, determine the net change in Accounts Receivable, Inventory, and Accounts Payable over the three-year period presented for each company (you should report only one number for each three-year period). What other working capital accounts have significant changes over the period? Briefly discuss what these changes might imply about working capital management for these firms.
2. What are the significant non-cash or non-operating adjustments these firms made during the years presented?
3. Identify the major investing and financing transactions for each firm for the three years presented. For each firm, indicate what the primary source of cash flows has been in the years presented.

Basic Analysis:

1. For each firm, compute and interpret the interest coverage ratio and cash flow adequacy ratio for the most recent year (as defined in the Class 13 slides). (Interest Expense for Firm A is 459 and for Firm B is 437.)
2. For each firm, compute and interpret the quality of earnings ratio for the most recent year (as defined in the Class 13 slides). Discuss any weaknesses of the ratio as a measure of the actual quality of earnings.

Extended Analysis:

1. Indicate which, if any, of these firms are at risk of having inadequate cash flows to continue operations. Briefly discuss the factors you considered in your analysis.
2. For each of the firms, indicate which phase of the companys life cycle you believe it is in (introduction, growth, maturity, or decline). Briefly discuss the reasons for your conclusion.

12 Months Ended Dec. 31, 2015 Dec. 31, 2014 Dec. 31, 2013 Consolidated Statements Of Cash Flows-USD $ in Millions CASHAND CASHEQUIVALENTS, BEGINNING OF PERIOD OPERATING ACTIVITIES Net income (loss Adjustments to reconcile net income (loss) to net cash from operating Depreciation of property and equipment, including internal-use softw are and website development, and other amortization, including capitalized content costs Stock-based compensation Other operating expense [income), net Losses (gains) on sales of marketable securities, net Other expense lincomel, net Deferred income taHes Encess ta benefits from stock-based c Changes in operating assets and liabilities: 14,557 $8,658 $8,084 6,281 4,746 3,253 1,497 114 245 81 (119) (316) (156) sation (2,187) [1.755) 4,294 913 (1,193) 1,759 4,433 (1.410) Accounts receivable, net and other ts payable d expenses and other 1,888 Additions to unearnedrevenue Amortization of previously unearned revenue Net cash provided by (used in) operating activities INVESTING ACTIVITIES Purchases of property and equipment, including internal-use software and website (6,109) (3,692) (2,292) 11,920 (4,589) (795) 4,091 (3,444) (312) 2,826 (4,893) Acquisitions, net of cash acquired, andother Sales and maturities of marketable securities Purchases of marketable securities Net cash provided by (used in) investing activities FINANCING ACTIVITIES Encess ta benefits from stock-ba Proceeds from long-term debt and other Repayments of long-term debt and other Principal repayments of capital lease obligations Principal repayments of finance lease obligations Net cash provided by (used in) financing activities Foreign-currency effect on cash and cash equivalents Net increase (decrease) in cash and cash equivalents CASHAND CASHEQUIVALENTS, END OF PERIOD SUPPLEMENTAL CASH FLOH INFORMATION Cash paid for interest onlong-term debt Cash paid for interest on capital and finance ease obligations Cash paid for income taes (net of refunds] Assets held under capital leases SUPPLEMENTAL CASH FLOH INFORMATION Property and equipment acquired Assets held under build-to-suit leases SUPPLEMENTAL CASH FLOH INFORMATION Property and equipment acquired 2,542 (5,065) (6,450) [4.276) 78 (231) ased compensation 119 1,652) (2,462) (121) (3.763) (374) 1,333 15,890 6,359 (513) (1.285) (135) 4.432 (310) 5,899 14,557 775) (539) 574 325 91 4,008 $544 920 Consolidated Balance Sheets - USD (S) $ in Millions Dec. 31, 2015 Dec. 31, 2014 Current assets: Cash and cash equivalents Marketable securities $15,890 3,918 10,243 6,423 36,474 21,838 3,759 3,373 65,444 $14,557 2,859 8,299 5,612 31,327 16,967 3,319 2,892 54,505 Inventories Accounts receivable, net and other Total current assets Property and equipment, net Goodwill Other assets Total assets Current liabilities Accounts payable Accrued expenses and other Unearned revenue Total current liabilities Long-term debt Other long-term liabilities Commitments and contingencies (Note Stockholders' equity: Preferred stock, $0.01 par value: Authorized shares 500 Issued and outstanding shares - none Common stock, $0.01 par value: Authorized shares - 5,000 Issued shares - 494 and 488 Outstanding shares 471 and 465 Treasury stock, at cost Additional paid-in capital Accumulated other comprehensive loss Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 20,397 10,384 3,118 33,899 8,235 $9,926 16,459 9,807 1,823 28,089 8,265 $7,410 0 0 (1,837) 13,394 (723) 2,545 13,384 $65,444 (1,837 11,135 (511) 1,949 10,741 $54,505