Below is a firm's cash flow statement. What are its operatingcash flows, financing cash flows and operating + investing cashflows?
Net loss $ (2,221) Depreciation and amortization 375 Impairment charges 427 Merchandise inventories 1,213 Merchandise payables (526) Other operating assets (649) Net cash used in operating activities (1,381) Proceeds from sales of property and investments 386 Purchases of property and equipment (142) Net cash provided by investing activities 244 Proceeds from debt issuances 1,962 Increase (decrease) in short-term borrowings (797) Proceeds from sale-leaseback financing 71 Debt issuance costs (51) Net cash provided by (used in) financing activities 1,185 NET INCREASE IN CASH AND CASH EQUIVALENTS 48 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 238 CASH AND CASH EQUIVALENTS, END OF PERIOD 286
OCF + ICF = (1,137)
OCF = (1,381)
FCF = 1,185
Below is a firm's cash flow statement. What are its operatingcash flows, financing cash flows and operating + investing cashflows?
| Net loss | $ (2,221) |
| Depreciation and amortization | 375 |
| Impairment charges | 427 |
| Merchandise inventories | 1,213 |
| Merchandise payables | (526) |
| Other operating assets | (649) |
| Net cash used in operating activities | (1,381) |
| Proceeds from sales of property and investments | 386 |
| Purchases of property and equipment | (142) |
| Net cash provided by investing activities | 244 |
| Proceeds from debt issuances | 1,962 |
| Increase (decrease) in short-term borrowings | (797) |
| Proceeds from sale-leaseback financing | 71 |
| Debt issuance costs | (51) |
| Net cash provided by (used in) financing activities | 1,185 |
| NET INCREASE IN CASH AND CASH EQUIVALENTS | 48 |
| CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 238 |
| CASH AND CASH EQUIVALENTS, END OF PERIOD | 286 |
| OCF + ICF = (1,137) |
| OCF = (1,381) |
| FCF = 1,185 |
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Related questions
| 1. We are trying to reduce our debt. How would you recommend modifying the cash flow (increase or decrease) in each of the three activities: (1) operating activities, (2) investing activities, and (3) financing activities? Explain. 2. We are trying to improve our operations by increasing cash flow in one of the three activities: (1) operating activities, (2) investing activities, or (3) financing activities. Which one of the three activities would you recommend, and why? Account name | |||
| CASH FLOWS FROM OPERATING ACTIVITIES | 2017 Q3 | 2017 Q2 | 2017 Q1 |
| Net income | $ 121,234.00 | $ 73,739.00 | $ 28,744.00 |
| Adjustments to reconcile net income to net cash provided by operating activities | |||
| Depreciation and amortization | $ 9,215.00 | $ 6,120.00 | $ 3,070.00 |
| Loss (gain) on disposal of assets | $ 32.00 | $ 4.00 | _ |
| Provision for bad debts, net | $ 1,796.00 | $ 916.00 | $ 561.00 |
| Non-cash stock compensation and other charges | $ 20,369.00 | $ 6,809.00 | $ 3,681.00 |
| Non-cash interest and other (income) loss | $ (451.00) | $ (274.00) | $ (301.00) |
| Deferred income taxes | $ 44,777.00 | $ (1,446.00) | $ (1,900.00) |
| Equity in net losses from unconsolidated joint ventures, less distributions received | $ 4,278.00 | $ 3,543.00 | $ 2,386.00 |
| Changes in assets and liabilities, net of acquisition | |||
| Receivables | $ (47,520.00) | $ (40,673.00) | $ (11,365.00) |
| Advances to/from marketing and reservation system activities, net | $ 43,697.00 | $ 17,407.00 | $ (216.00) |
| Forgivable notes receivable, net | $ (21,443.00) | $ (14,108.00) | $ (4,483.00) |
| Accounts payable | $ 19,679.00 | $ 18,955.00 | $ 9,203.00 |
| Accrued expenses and other current liabilities | $ (11,540.00) | $ (11,286.00) | $ (25,048.00) |
| Income taxes payable/receivable | $ (20,114.00) | $ 5,629.00 | $ 13,012.00 |
| Deferred revenue | $ 3,650.00 | $ 2,061.00 | $ 12,579.00 |
| Other assets | $ (1,162.00) | $ (1,764.00) | $ (4,958.00) |
| Other liabilities | $ (1,578.00) | $ (1,524.00) | $ (751.00) |
| Net cash provided by operating activities | $ 165,019.00 | $ 64,108.00 | $ 24,214.00 |
| CASH FLOWS FROM INVESTING ACTIVITIES | |||
| Investment in property and equipment | $ (17,514.00) | $ (10,687.00) | $ (4,718.00) |
| Investment in intangible assets | $ (2,376.00) | $ (2,228.00) | $ (2,088.00) |
| Proceeds from sales of assets | _ | _ | |
| Business acquisition, net of cash acquired | _ | _ | |
| Contributions to equity method investments | $ (44,876.00) | $ (42,127.00) | $ (31,610.00) |
| Distributions from equity method investments | $ 4,307.00 | $ 1,696.00 | $ 501.00 |
| Purchases of investments, employee benefit plans | $ (2,140.00) | $ (1,736.00) | $ (1,424.00) |
| Proceeds from sales of investments, employee benefit plans | $ 2,150.00 | $ 2,084.00 | $ 843.00 |
| Issuance of mezzanine and other notes receivable | $ (18,565.00) | $ (14,977.00) | $ (9,863.00) |
| Collections of mezzanine and other notes receivable | $ 630.00 | $ 552.00 | $ 522.00 |
| Acquisitions of real estate | _ | ||
| Other items, net | $ 109.00 | $ 110.00 | $ (4.00) |
| Net cash used by investing activities | $ (78,275.00) | $ (67,303.00) | $ (47,832.00) |
| CASH FLOWS FROM FINANCING ACTIVITIES | |||
| Net (repayments) borrowings pursuant to revolving credit facilities | $ (39,974.00) | $ 23,200.00 | $ 22,800.00 |
| Principal payments on long-term debt | $ (484.00) | $ (309.00) | $ (153.00) |
| Purchases of treasury stock | $ (8,887.00) | $ (7,414.00) | $ (7,271.00) |
| Dividends paid | $ (36,483.00) | $ (24,333.00) | $ (12,139.00) |
| Debt issuance costs | _ | ||
| Proceeds from transfer of interest in notes receivable | $ 24,237.00 | $ 23,200.00 | _ |
| Proceeds from exercise of stock options | $ 9,799.00 | $ (309.00) | $ 4,963.00 |
| Net cash used by financing activities | $ (51,792.00) | $ (2,266.00) | $ 8,200.00 |
| Net change in cash and cash equivalents | $ 34,952.00 | $ (5,561.00) | $ (15,418.00) |
| Effect of foreign exchange rate changes on cash and cash equivalents | $ 1,433.00 | $ 955.00 | $ 427.00 |
| Cash and cash equivalents at beginning of period | $ 202,463.00 | $ 202,463.00 | $ 202,463.00 |
| Cash and cash equivalents at end of period | $ 238,848.00 | $ 197,957.00 | $ 187,472.00 |
| Supplemental disclosure of cash flow information: | |||
| Cash payments during the period for: | |||
| Income taxes, net of refunds | $ 31,254.00 | $ 30,813.00 | $ 1,454.00 |
| Interest, net of capitalized interest | $ 41,119.00 | $ 21,206.00 | $ 19,874.00 |
| Non-cash investing and financing activities: | |||
| Dividends declared but not paid | $ 12,167.00 | $ 12,133.00 | $ 12,195.00 |
| Investment in property and equipment acquired in accounts payable | $ 758.00 | $ 895.00 | $ 724.00 |
| Non-cash sale of investment of unconsolidated joint venture | _ | _ | _ |
Avnet Inc.
Avnet is one of the worldâs largest value-added distributors of electronic componenets, enterprise computer and storage products, IT services and embedded subsystems. Avnet creates a vital link in the technology supply chain that connects the worldâs leading electronic component and computer product manufacturers and software developers with a global customer base of original equipment manufacturers, electronic manufacturing services providers, original design manufacturers, and valueadded resellers.8
Avnet, Inc. and Subsidiaries Consolidated Statements of Cash Flows
| Years Ended | |||||
| June 29, 2013 | June 30, 2012 | July 2, 2011 | |||
| (Thousands) | |||||
| Cash flows from operating activities: | |||||
| Net income | $450,073 | $567,019 | $669,069 | ||
| Non-cash and other reconciling items: | |||||
| Depreciation and amortization | 120,676 | 101,336 | 81,389 | ||
| Deferred income taxes (Note 9) | (10,019) | 11,782 | 15,966 | ||
| Stock-based compensation (Note 12) | 43,677 | 35,737 | 28,931 | ||
| Gain on bargain purchase and other (Note 2) | (31,011) | (2,918) | (22,715) | ||
| Other, net (Note 15) | 75,327 | 66,263 | 56,846 | ||
| Changes in (net of effects from businesses | |||||
| acquired): | |||||
| Receivables | (94,203) | 72,267 | (421,457) | ||
| Inventories | 225,667 | 133,178 | (321,939) | ||
| Accounts payable | (78,834) | (319,094) | 165,185 | ||
| Accrued expenses and other, net | (5,156) | (136,852) | 26,804 | ||
| Net cash flows provided by operating | |||||
| activities | 696,197 | 528,718 | 278,079 | ||
| Cash flows from financing activities: | |||||
| (Repayments of) borrowings under accounts | |||||
| receivable securitization program, net (Note 3) | (310,000) | 510,000 | 160,000 | ||
| Issuance of notes in a public offering, net of | |||||
| issuance costs (Note 7) | 349,258 | ? | ? | ||
| Repayment of notes (Note 7) | ? | ? | (109,600) | ||
| (Repayments of) proceeds from bank debt, | |||||
| net (Note 7) | (179,861) | 86,823 | 1,644 | ||
| (Repayments of) proceeds from other debt, net (Note 7) | (1,080) | (1,007) | 7,238 | ||
| Repurchases of common stock (Note 4) | (207,192) | (318,333) | ? | ||
| Other, net (Note 12) | 4,792 | 5,590 | 3,930 | ||
| Net cash flows (used for) provided by financing activities | (344,083) | 283,073 | 63,212 | ||
| Cash flows from investing activities: Purchases of property, plant and equipment | (97,379) | (128,652) | (148,707) | ||
| Cash proceeds from sales of property, plant, and equipment | 3,018 | 1,046 | 10,621 | ||
| Acquisitions of operations and investments, net of cash acquired (Note 2) | (262,306) | (313,218) | (690,997) | ||
| Cash proceeds from divestiture activities (Note 2) | 3,613 | ? | 19,108 | ||
| Net cash flows used for investing activities | (353,054) | (440,824) | (809,975) | ||
| Effect of exchange rate changes on cash and cash equivalents | 3,419 | (39,437) | 51,916 | ||
| Cash and cash equivalents: ? increase (decrease) | 2,479 | 331,530 | (416,768) | ||
| ? at beginning of year | 1,006,864 | 675,334 | 1,092,102 | ||
| ? at end of year | $ 1,009,343 | $1,006,864 | $ 675,334 | ||
Required:
(a) Using the Consolidated Statements of Cash Flows for Avnet, prepare a summary analysis for all three years.
(b) Write an analysis and interpretation of the cash flows for Avnet for all three years. Be sure to analyze the cash flows from operating activities, as well as the overall cash inflows and outflows for the firm.
(c) Evaluate the creditworthiness of Avnet based on only the cash flow statements.
(d) What information from the balance sheet would be useful to a creditor in determining whether to loan Avnet money?
Avnet is one of the worldâs largest value-added distributors of electronic components, enterprise computer and storage products, IT services and embedded subsystems. Avnet creates a vital link in the technology supply chain that connects the worldâs leading electronic component and computer product manufacturers and software developers with a global customer base of original equipment manufacturers, electronic manufacturing services providers, original design manufacturers, and value-added resellers.8
8 Extracted from 10-K filings for Avnet Inc., 2013. Obtained from U.S. Securities and Exchange Commission. www.sec.gov.
| Avnet, Inc. and Subsidiaries Consolidated Statements of Cash Flows | |||
|---|---|---|---|
| Years Ended | |||
| June 29, 2013 | June 30, 2012 | July 2, 2011 | |
| (Thousands) | |||
| Cash flows from operating activities: | |||
| Net income | $ 450,073 | $ 567,019 | $ 669,069 |
| Non-cash and other reconciling items: | |||
| Depreciation and amortization | 120,676 | 101,336 | 81,389 |
| Deferred income taxes (Note 9) | (10,019) | 11,782 | 15,966 |
| Stock-based compensation (Note 12) | 43,677 | 35,737 | 28,931 |
| Gain on bargain purchase and other (Note 2) | (31,011) | (2,918) | (22,715) |
| Other, net (Note 15) | 75,327 | 66,263 | 56,846 |
| Changes in (net of effects from businesses acquired): | |||
| Receivables | (94,203) | 72,267 | (421,457) |
| Inventories | 225,667 | 133,178 | (321,939) |
| Accounts payable | (78,834) | (319,094) | 165,185 |
| Accrued expenses and other, net | (5,156) | (136,852) | 26,804 |
| Net cash flows provided by operating activities | 696,197 | 528,718 | 278,079 |
| Cash flows from financing activities: | |||
| (Repayments of) borrowings under accounts receivable securitization program, net (Note 3) | (310,000) | 510,000 | 160,000 |
| Issuance of notes in a public offering, net of issuance costs (Note 7) | 349,258 | â | â |
| Repayment of notes (Note 7) | â | â | (109,600) |
| (Repayments of) proceeds from bank debt, net (Note 7) | (179,861) | 86,823 | 1,644 |
| (Repayments of) proceeds from other debt, net (Note 7) | (1,080) | (1,007) | 7,238 |
| Repurchases of common stock (Note 4) | (207,192) | (318,333) | â |
| Other, net (Note 12) | 4,792 | 5,590 | 3,930 |
| Net cash flows (used for) provided by financing activities | (344,083) | 283,073 | 63,212 |
| Cash flows from investing activities: | |||
| Purchases of property, plant and equipment | (97,379) | (128,652) | (148,707) |
| Cash proceeds from sales of property, plant, and equipment | 3,018 | 1,046 | 10,621 |
| Acquisitions of operations and investments, net of cash acquired (Note 2) | (262,306) | (313,218) | (690,997) |
| Cash proceeds from divestiture activities (Note 2) | 3,613 | â | 19,108 |
| Net cash flows used for investing activities | (353,054) | (440,824) | (809,975) |
| Effect of exchange rate changes on cash and cash equivalents | 3,419 | (39,437) | 51,916 |
| Cash and cash equivalents: | |||
| â increase (decrease) | 2,479 | 331,530 | (416,768) |
| â at beginning of year | 1,006,864 | 675,334 | 1,092,102 |
| â at end of year | $ 1,009,343 | $ 1,006,864 | $ 675,334 |
| Additional cash flow information (Note 15) See notes to consolidated financial statements. | |||
Required:
Using the Consolidated Statements of Cash Flows for Avnet, prepare a summary analysis for all three years.
Write an analysis and interpretation of the cash flows for Avnet for all three years. Be sure to analyze the cash flows from operating activities, as well as the overall cash inflows and outflows for the firm.
Evaluate the credit worthiness of Avnet based on only the cash flow statements.
What would information from the balance sheet be useful to a creditor in determining whether to loan Avnet money?