Question

Avnet is one of the world’s 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 world’s 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	—	—
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
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?