Using the data (in $ millions) adapted from McKesson Corporation's 2017 annual report, generate 1) a complete statement of cash flows using the indirect method, 2) a direct method summary of the cash flow from operating activities, and 3) a complete UCA model statement of cash flows. Hints: Cash flow from operations as found on the direct and indirect method (GAAP) cash flow statements = $2,978 and Net cash after operations as found on the UCA statement = $3,281.

c1b138658e7fdaff74f86e812116ac8efc9ca30b.xlsx Assets Cash and equivalents Accounts receivable, net Deferred tax assets Inventory Prepaid and other current expenses Total current assets Property, plant and equipment, gross Accumulated depreciation Property, plant and equipment, net Long-term investments Equity investments Intangible assets Other long-term assets Total assets 2017 2016 $2,783 $4,048 18,215 17,980 0 0 15,278 15,335 672 1,072 36,948 38,435 3,803 3,784 (1,511) (1,506) 2,292 2,278 9,964 4,477 363 333 7,987 7,994 3,415 3,003 $60,969 $56,520 Liabilities and Shareholders' Equity Accounts payable Accrued expenses Deferred revenue Current portion of long-term debt Interest payable Notes payable (short-term debt) Income taxes payable Dividends payable Other current liabilities Total current liabilities Long-term debt Deferred income taxes Other long-term liabilities Total liabilities Common stock Additional paid-in capital Retained earnings Total equity Total liabilities and equity $31,022 2,114 346 1,057 8 183 316 44 522 35,612 7,305 3,678 3,101 49,696 4 6,027 5,242 11,273 $60,969 $28,585 3,027 919 1,610 3 7 345 38 535 35,069 6,497 2,734 3,215 47,515 3 5,842 3,160 9,005 $56,520 Sales Less: Cost of sales Gross profit Less: Selling and administrative expense Operating income (loss) Other income (expense): Interest expense Interest and other noninterest income Gain (loss) on sale of PP&E Equity investment income (loss) Income (loss) before income taxes Less: Income tax expense Net income (loss) Disposal of fixed asset Gain (loss) on disposal BV of disposed asset 2017 $198,533 187,262 11,271 8,104 3,167 (308) 55 3,947 30 6,891 1,821 $5,070 $4,533 3,947 $586 FINC 5333 EMBA 2017-18 Homework Assignment 3 Using the data (in $ millions) adapted from McKesson Corporation's 2017 annual report, generate 1) a complete statement of cash flows using the indirect method, 2) a direct method summary of the cash flow from operating activities, and 3) a complete UCA model statement of cash flows. Please submit your work via the assignment submission feature in Blackboard. Hints: Cash flow from operations as found on the direct and indirect method (GAAP) cash flow statements = $2,978 and Net cash after operations as found on the UCA statement = $3,281. Assets Cash and equivalents Accounts receivable, net Deferred tax assets Inventory Prepaid and other current expenses Total current assets Property, plant and equipment, gross Accumulated depreciation Property, plant and equipment, net Long-term investments Equity investments Intangible assets Other long-term assets Total assets 2017 $2,783 18,215 0 15,278 672 36,948 3,803 (1,511) 2,292 9,964 363 7,987 3,415 $60,969 2016 $4,048 17,980 0 15,335 1,072 38,435 3,784 (1,506) 2,278 4,477 333 7,994 3,003 $56,520 Liabilities and Shareholders' Equity Accounts payable Accrued expenses Deferred revenue Current portion of long-term debt Interest payable Notes payable (short-term debt) Income taxes payable Dividends payable Other current liabilities Total current liabilities Long-term debt Deferred income taxes Other long-term liabilities Total liabilities Common stock Additional paid-in capital Retained earnings Total equity Total liabilities and equity $31,022 2,114 346 1,057 8 183 316 44 522 35,612 7,305 3,678 3,101 49,696 4 6,027 5,242 11,273 $60,969 $28,585 3,027 919 1,610 3 7 345 38 535 35,069 6,497 2,734 3,215 47,515 3 5,842 3,160 9,005 $56,520 Sales Less: Cost of sales Gross profit Less: Selling and administrative expense Operating income (loss) Other income (expense): Interest expense Interest and other noninterest income Gain (loss) on sale of PP&E Equity investment income (loss) Earnings before taxes Less: Income tax expense Net income (loss) 2017 $198,533 187,262 11,271 8,104 3,167 (308) 55 3,947 30 6,891 (1,821) $5,070 Footnotes Depreciation of $288 million is included in the cost of sales. Depreciation of $36 million and amortization of intangibles of $7 million is included in SG&A expenses. During the year, the company sold fixed assets for $4,533 million. The assets had a net book value of $586 million, which led to the recognition of a capital gain of $3,947 million. FINC 5333 EMBA Assignment 3 Example Using the data adapted from Deluxe Corporation's 2015 annual report, generate 1) a complete statement of cash flows using the indirect method, 2) a direct method summary of cash flow from operating activities, and 3) a complete UCA model statement of cash flows. Please submit your work via the assignment submission feature in Blackboard. Hints: Cash flow from operations = $99 and Net cash after operations = $117. 2014 Assets 2015 Cash and equivalents $62 $60 Accounts receivable, net 124 113 Deferred tax assets 0 8 Inventory 42 38 Prepaid and other current expenses 98 95 Total current assets 326 314 Property, plant and equipment, gross 431 436 Accumulated depreciation (345) (348) Property, plant and equipment, net 86 88 Long-term investments 42 46 Equity investments 14 31 Goodwill 846 868 Other long-term assets 530 341 Total assets $1,844 $1,688 Liabilities and Shareholders' Equity Accounts payable Accrued expenses Deferred revenue Current portion of long-term debt Interest payable Notes payable Income taxes payable Dividends payable Other current liabilities Total current liabilities Long-term debt Deferred income taxes Other long-term liabilities Total liabilities Common stock Additional paid-in capital Retained earnings (deficit) Total equity Total liabilities and equity Income Statement 2015 Sales $1,773 Cost of sales 665 Gross profit 1,108 Selling, general and administrative expense 761 Operating income (loss) 347 Other income (expense): Interest expense (20) Interest and other noninterest income 5 Gain (loss) on sale of PP&E (12) Equity investment income (loss) (17) Income (loss) before income taxes 303 Income tax (expense) benefit (87) Net income (loss) $216 $88 $79 218 225 26 32 1 1 4 2 434 160 5 10 2 1 22 35 800 545 196 393 81 97 22 32 1,099 1,067 50 49 135 120 560 452 745 621 $1,844 $1,688 Footnotes Depreciation of $26 is included in the cost of sales. Depreciation of $51 and amortization of intangibles of $22 is included in SG&A expenses. During the year the company sold fixed assets for $45 million. These assets had a net book value of $57 million, which led to the recognition of a capital loss of $12 million. Sales Cost of sales Gross profit Selling, general and administrative expense Operating income (loss) Other income (expense): Interest expense Interest and other noninterest income Gain (loss) on sale of PP&E Equity investment income (loss) Income (loss) before income taxes Income tax (expense) benefit Net income (loss) Depreciation expense included in cost of sales Depreciation expense included in SG&A expenses Amortization expense included in SG&A expenses 2015 $1,773 665 1,108 761 347 (20) 5 (12) (17) 303 (87) $216 $26 $51 $22 Assets Cash and equivalents Accounts receivable, net Deferred tax assets Inventory Prepaid and other current expenses Total current assets Property, plant and equipment, gross Accumulated depreciation Property, plant and equipment, net Long-term investments Equity investments Goodwill Other long-term assets Total assets 2015 $62 124 0 42 98 326 431 (345) 86 42 14 846 530 $1,844 2014 Change $60 $2 113 11 8 (8) 38 4 95 3 314 12 436 (5) (348) 3 88 (2) 46 (4) 31 (17) 868 (22) 341 189 $1,688 $156 Liabilities and Shareholders' Equity Accounts payable Accrued expenses Deferred revenue Current portion of long-term debt Interest payable Notes payable Income taxes payable Dividends payable Other current liabilities Total current liabilities Long-term debt Deferred income taxes Other long-term liabilities Total liabilities Common stock Additional paid-in capital Retained earnings (deficit) Total equity Total liabilities and equity $88 218 26 1 4 434 5 2 22 800 196 81 22 1,099 50 135 560 745 $1,844 $79 225 32 1 2 160 10 1 35 545 393 97 32 1,067 49 120 452 621 $1,688 Disposal of fixed asset Gain (loss) on disposal BV of disposed asset $45 (12) $57 $9 (7) (6) 0 2 274 (5) 1 (13) 255 (197) (16) (10) 32 1 15 108 124 $156 Cash Flows from Operating Activities (Indirect method) Net income Add (deduct) adjustments to cash basis: Add back depreciation Add back amortization of intangibles Add back increase (subtract decrease) in deferred taxes Add back loss (subtract earnings) of affiliates Add back loss (subtract gain) on sale of fixed assets (Increase) decrease in receivables (Increase) decrease in inventories (Increase) decrease in deferred tax assets (Increase) decrease in other current assets (Increase) decrease in other noncurrent assets Increase (decrease) in accounts payable Increase (decrease) in accrued expenses Increase (decrease) in deferred revenune Increase (decrease) in interest payable Increase (decrease) in taxes payable Increase (decrease) in other current liabilities Increase (decrease) in other noncurrent liabilities Net Cash Flow from Operating Activities $216 from income statement 77 22 (16) 17 12 (11) (4) 8 (3) (189) 9 (7) (6) 2 (5) (13) (10) $99 from income statement Cash Flow from Investing Activities Purchase of fixed assets Purchase of long-term investments Sale of fixed assets Net Cash Flow from Investing Activities (132) 4 45 ($83) from calculation below Cash Flow from Financing Activities Net proceeds from issuance (repurchase) of long-term debt Issuance (purchase) of capital stock Net proceeds from issuance (repurchase) of notes payable Payment of dividends (div declared - change in div payable) Net Cash Flow from Financing Activities (197) 16 274 (107) ($14) from change on balance sheets ($196 + $01) - ($393 + $01) from change on balance sheets ($50 + $135) - ($49 + $120) from change on balance sheets $434 - $160 Net change in Cash Change in Cash (Balance Sheet) Cash Flows from Operating Activities (Direct method) Cash received from sales = Sales - AR + Def rev Cash received from other sources Cash for inventory = COGS + INV - AP - depr in COGS Cash for operations = SGA exp + Ppds & Other op assets - Acc & other op liabs - depr & amort in SGA Cash for interest = Int exp - Int pay Cash for taxes = Tax exp - Tax pay - Dfd tax + Dfd tax asset Net Cash Flow from Operations 2 2 0 $1,756 5 (634) from income statement from change on balance sheets from income statement from change on balance sheets $113 - $124 from change on balance sheets $38 - $42 from change on balance sheets $08 - $00 from change on balance sheets $95 - $98 from change on balance sheets $341 - $530 from change on balance sheets $88 - $79 from change on balance sheets $218 - $225 from change on balance sheets $26 - $32 from change on balance sheets $04 - $02 from change on balance sheets $05 - $10 from change on balance sheets $22 - $35 from change on balance sheets $22 - $32 from change on balance sheets Beg of year net fixed assets Less net book value of disposed fixed assets Less depreciation expense Less end of year net fixed assets Purchase of new fixed assets [plug figure] $88 (57) (77) (86) ($132) Beg of year retained earnings Plus net income Less end of year retainied earnings Dividends paid (in absolute terms) $452 216 560 $108 $46 - $42 given from calculation below and change in div payable$108 - ($02 + $01) $99 + -$83 + -$14 $1,773 - ($124 - $113) + ($32 - $26) $665 - $26 + ($42 - $38) - ($88 - $79) $761 - $51 - $22 + ($98 - $95) + ($530 - $341) - (910) (18) (100) $99 $81 - $97 from income statement ($218 - $225) - ($22 - $35) + ($22 - $32) $20 - ($04 - $02) $87 - ($05 - $10) - ($81 - $97) + ($00 - $08) Sales - Change in accounts receivable + Change in deferred revenue CASH FROM SALES Cost of goods sold (excl depreciation) + Change in inventories - Change in accounts payable CASH PRODUCTION COSTS GROSS CASH PROFITS Operating expense (excl depr & amort) + Change in prepaids - Change in accruals + Change in other operating assets (noncurrent) - Change in other operating liabilities (curr & noncurr) Cash operating expense CASH AFTER OPERATIONS Misc. cash income (expense) Income taxes paid Reported tax expense + Change in deferred taxes + Change in taxes payable - Change in deferred tax assets NET CASH AFTER OPERATIONS Interest paid Interest expense - Change in interest payable Cash interest paid Dividends declared (REold + NI - REnew) - Change in dividends payable Cash dividends paid Financing costs NET CASH INCOME Current portion long-term debt (previous year) CASH AFTER DEBT AMORTIZATION Capital expenditures Investments in PPE Depreciation expense of PPE Gain (Loss) on sale of PPE Other investments Total investments to support operations FINANCING SURPLUS (REQUIREMENTS) Current portion long-term debt (this year) Change in short-term debt Change in long-term debt Change in equity (excl. retained earnings) Total external financing CASH AFTER FINANCING Actual change in cash (check figure) $1,773 (11) (6) $1,756 639 4 ($9) 634 1,122 688 3 7 189 23 $761 - $51 - $22 $13 + $10 910 212 5 (87) (16) (5) 8 (100) 117 (20) 2 (18) (108) 1 (107) (125) (8) (1) (9) 2 (77) (12) (87) 4 $18 + $107 $26 + $51 (83) (92) 1 274 (197) 16 94 $2 $2