Questions: Exhibits 1, 2, and 3 contain cash-flow statements from three companies. Each cash- flowstatement has three years of data. Examine the contents of these cash-flow statements carefully.Answer the following questions about each of the three cash-flow statements.I. For each of the years on the Statement of Cash Flows:1. What were the firm's major sources of cash? Its major uses of cash?2. Was cash flow from operations1 greater than or less than net income?2 Explain indetail the major reasons for the difference between these two figures.3. Was the firm able to generate enough cash from operations to pay for all of itscapital expenditures? 4. Did the cash flow from operations cover both the capital expenditures and the firm's dividend payments, if any? Alpha Corporation - Consolidated Statement of Cash FlowsYear EndedJune 30, 1991June 30, 1990June 30, 1989Operating Activities Loss from continuing operations$(377.9)$(623.5)$(320.6)Depreciation$168.4$220.1$263.4Amortization of capitalized software$41.4$58.2$39.1Gain from sale of investments and other assets$(16.6)$(119.0)-Restructuring and other unusual items, net$135.5$384.1$125.3Changes in other accounts affecting operations Accounts receivable$160.8$73.4$(45.2)Inventory$80.2$100.9$(3.0)Other current assets$17.0$(1.2)$(13.0)Accounts payable and other current liabilities$(91.3)$(21.3)$41.0Other$2.8$14.1$(10.5)Net cash provided by continuing operations$120.3$85.8$76.5Net cash provided by (used in) discontinued operations$4.9$3.5$(29.7)Net cash provided by operating activities$125.2$89.3$46.8Investing Activities Investment in depreciable assets$(129.7)$(174.4)$(303.6)Proceeds from disposal of depreciable and other assets$157.0$242.0$94.1Proceeds from the sale of discontinued operations$25.3$407.3-Investment in capitalized software$(27.8)$(43.1)$(59.5)Other$(6.0)$(13.0)$14.2Net cash provided by (used in) investing activities$18.8$418.8$(254.8)Financing Activities (Decrease) increase in short-term borrowings$(2.6)$(222.6)$139.8Proceeds from long-term debt$44.4$167.7$305.0Payments of long-term debt$(126.5)$(544.8)$(91.7)Proceeds from sale of Class B common stock$5.0$8.7$17.5Purchase of treasury stock$(0.3)$(0.6)$(18.8)Dividends paid-$(7.2)$(26.0)Net cash provided by (used in) financing activities$(80.0)$(598.8)$325.8Effect of changes in foreign exchange rates$0.1$1.1$(3.9)Increase (decrease) in cash equivalents$64.1$(89.6)$113.9Cash and equivalents at beginning of year$169.1$258.7$144.8Cash and equivalents at end of year$233.2$169.1$258.7Note: Figures are in millions. Parentheses indicate negative values.

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Answered: Exhibits 1, 2, and 3 contain cash-flow…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Questions: Exhibits 1, 2, and 3 contain cash-flow statements from three companies. Each cash- flowstatement has three years of data. Examine the contents of these cash-flow statements carefully.Answer the following questions about each of the three cash-flow statements.I. For each of the years on the Statement of Cash Flows:1. What were the firm's major sources of cash? Its major uses of cash?2. Was cash flow from operations1 greater than or less than net income?2 Explain indetail the major reasons for the difference between these two figures.3. Was the firm able to generate enough cash from operations to pay for all of itscapital expenditures? 4. Did the cash flow from operations cover both the capital expenditures and the firm's dividend payments, if any?

Alpha Corporation - Consolidated Statement of Cash Flows

Year Ended	June 30, 1991	June 30, 1990	June 30, 1989
Operating Activities
Loss from continuing operations	$(377.9)	$(623.5)	$(320.6)
Depreciation	$168.4	$220.1	$263.4
Amortization of capitalized software	$41.4	$58.2	$39.1
Gain from sale of investments and other assets	$(16.6)	$(119.0)	-
Restructuring and other unusual items, net	$135.5	$384.1	$125.3
Changes in other accounts affecting operations
Accounts receivable	$160.8	$73.4	$(45.2)
Inventory	$80.2	$100.9	$(3.0)
Other current assets	$17.0	$(1.2)	$(13.0)
Accounts payable and other current liabilities	$(91.3)	$(21.3)	$41.0
Other	$2.8	$14.1	$(10.5)
Net cash provided by continuing operations	$120.3	$85.8	$76.5
Net cash provided by (used in) discontinued operations	$4.9	$3.5	$(29.7)
Net cash provided by operating activities	$125.2	$89.3	$46.8
Investing Activities
Investment in depreciable assets	$(129.7)	$(174.4)	$(303.6)
Proceeds from disposal of depreciable and other assets	$157.0	$242.0	$94.1
Proceeds from the sale of discontinued operations	$25.3	$407.3	-
Investment in capitalized software	$(27.8)	$(43.1)	$(59.5)
Other	$(6.0)	$(13.0)	$14.2
Net cash provided by (used in) investing activities	$18.8	$418.8	$(254.8)
Financing Activities
(Decrease) increase in short-term borrowings	$(2.6)	$(222.6)	$139.8
Proceeds from long-term debt	$44.4	$167.7	$305.0
Payments of long-term debt	$(126.5)	$(544.8)	$(91.7)
Proceeds from sale of Class B common stock	$5.0	$8.7	$17.5
Purchase of treasury stock	$(0.3)	$(0.6)	$(18.8)
Dividends paid	-	$(7.2)	$(26.0)
Net cash provided by (used in) financing activities	$(80.0)	$(598.8)	$325.8
Effect of changes in foreign exchange rates	$0.1	$1.1	$(3.9)
Increase (decrease) in cash equivalents	$64.1	$(89.6)	$113.9
Cash and equivalents at beginning of year	$169.1	$258.7	$144.8
Cash and equivalents at end of year	$233.2	$169.1	$258.7

Note: Figures are in millions. Parentheses indicate negative values.

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