Sample Questions 1. Below is an excerpt from the cash flow statement of a firm for fiscal year 2011: Fiscal Year Ended December 31, 2011 $1,500 250 400 450 200 20 Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash from operations: Depreciation and amortization Amortization of software Tax benefits of employee stock plans Special charges (Gains)/losses on investments Change in operating assets and liabilities: Receivables Inventories Pension assets Other assets Accounts payable Pension liabilities Other liabilities 600 250 (475) 70 (50) 85 200 Net cash provided by operating activities 3,500 Cash flows from investing activities: Payments for plant and other property Proceeds from disposition of plant and other property Investment in software Purchases of marketable securities and other investments Proceeds from disposition of marketable securities and other investments (2,000) 800 (500) (1,500) 1,200 (2,000) Net cash used in investing activities Additional information: Cash interest receipts Cash interest payments Net payout to shareholders The firm's tax rate is 35%. 110 (200) 2,500 Calculate: 1) Total accruals; 2) Free cash flow for 2011; and 3) Net payments to debt holders and debt issuers for 2011. Sample Questions 1. Below is an excerpt from the cash flow statement of a firm for fiscal year 2011: Fiscal Year Ended December 31, 2011 $1,500 250 400 450 200 20 Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash from operations: Depreciation and amortization Amortization of software Tax benefits of employee stock plans Special charges (Gains)/losses on investments Change in operating assets and liabilities: Receivables Inventories Pension assets Other assets Accounts payable Pension liabilities Other liabilities 600 250 (475) 70 (50) 85 200 Net cash provided by operating activities 3,500 Cash flows from investing activities: Payments for plant and other property Proceeds from disposition of plant and other property Investment in software Purchases of marketable securities and other investments Proceeds from disposition of marketable securities and other investments (2,000) 800 (500) (1,500) 1,200 (2,000) Net cash used in investing activities Additional information: Cash interest receipts Cash interest payments Net payout to shareholders The firm's tax rate is 35%. 110 (200) 2,500 Calculate: 1) Total accruals; 2) Free cash flow for 2011; and 3) Net payments to debt holders and debt issuers for 2011
