FIN 300 Study Guide - Final Guide: Reserve Requirement, Unsecured Debt, Interest Rate Risk
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Using the table below, explain the difference between net income and cash flow from operating activities for Techno in 2009 and analyze their cash flows for 2008 and 2009.
| (in thousands) | 2009 | 2008 |
| Net income | $ 316,354 | $ 242,329 |
| Noncash charges (credits) to income | ||
| Depreciation and amortization | 68,156 | 62,591 |
| Deferred taxes | 15,394 | 22,814 |
| $ 399,904 | $ 327,734 | |
| Cash Provided (Used) by Operating Assets and Liabilities: | ||
| Receivables | (288,174) | (49,704) |
| Inventories | (159,419) | (145,554) |
| Other current assets | (1,470) | 3,832 |
| Accounts payable, accrued liabilities | 73,684 | 41,079 |
| Total Cash Provided by Operations | $ 24,525 | $ 177,387 |
| Investment activities | ||
| Additions to plant and equipment | (94,1760) | (93,136) |
| Other investment activities | 14,408 | (34,771) |
| Net investment activities | ($ 79,768) | ($ 127,907) |
| Financing activities | ||
| Purchases of treasury stock | (45,854) | (39,267) |
| Dividends paid | (49,290) | (22,523) |
| Net changes in short-term borrowing | 125,248 | 45,067 |
| Additions to long-term borrowings | 135,249 | 4,610 |
| Repayments of long-term borrowings | (250,564) | |
| Net financing activities | $ 165,353 | ($ 262,677) |
| Increase (decrease) in cash | $ 110,110 | ($ 213,197) |
| Beginning cash balance | 78,114 | 291,311 |
| Ending cash balance | $ 188,224 | $ 78,114 |
| 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 | _ | _ | _ |