This activity will require two teams to retrieve cash flow statement information from the Internet. One team

Question:

This activity will require two teams to retrieve cash flow statement information from the Internet. One team is to obtain the most recent year’s statement of cash flows for Johnson & Johnson, and the other team the most recent year’s statement of cash flows for AMR Corp.

The statement of cash flows is included as part of the annual report information that is a required disclosure to the Securities and Exchange Commission (SEC).

SEC documents can be retrieved using the EdgarScanTM service at www.sec.gov/ edgar/searchedgar/webusers.htm.

To obtain annual report information, type in a company name in the appropriate space. EdgarScan will list the reports available to you for the company you’ve selected. Select the most recent annual report filing, identified as a 10-K or 10-K405. EdgarScan provides an outline of the report, including the separate financial statements. You can double-click the income statement and balance sheet for the selected company into an ExcelTM spreadsheet for further analysis. As a group, compare the two statements of cash flows.

a. How are Johnson & Johnson and AMR Corp. similar or different regarding cash flows?

b. Compute and compare the free cash flow for each company, assuming additions to property, plant, and equipment replace current capacity.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Free Cash Flow
Free cash flow (FCF) represents the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets. Unlike earnings or net income, free cash flow is a measure of profitability that excludes the...