Stryker paid $300 million to repurchase its common stock in fiscal 2018 and, in addition, paid dividends of $703 million. Thus, it paid $1.003 million of cash to its stockholders during the year. How do we evaluate that use of cash relative to other possible uses for the company's cash?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
100%

A) Stryker paid $300 million to repurchase its common stock in fiscal 2018 and, in addition, paid dividends of $703 million. Thus, it paid $1.003 million of cash to its stockholders during the year. How do we evaluate that use of cash relative to other possible uses for the company's cash?

B) Provide an overall assessment of the company's cash flows for fiscal 2018. In the analysis, consider the sources and uses of cash.

STRYKER CORPORATION
Consolidated Statements of Cash Flows
For Year Ended December 31, 2018 (S millions)
Operating activities
Net earnings (loss)..
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation ..
Amortization of intangible assets
Share-based compensation
Recall charges, net of insurance proceeds
Sale of inventory stepped up to fair value at acquisition
Deferred income tax benefit (expense)
Changes in operating assets and liabilities
Accounts receivable
$3,553
306
417
119
23
16
(1,582)
(60)
(385)
Inventories
Accounts payable
Accrued expenses and other liabilities
Recall-related payments.
Income taxes. .
Other, net ....
116
289
(90)
(156)
44
Net cash provided by operating activities.
2,610
Investing activities
Acquisitions, net of cash acquired
Purchases of marketable securities.
(2,451)
(226)
394
Proceeds from sales of marketable securities
Purchases of property, plant and equipment
Other investing, net ..
(572)
(2)
Net cash used in investing activities.
Financing activities
Proceeds and payments on short-term borrowings, net.
Proceeds from issuance of long-term debt..
Payments on long-term debt
Dividends paid
Repurchase of common stock.
Cash paid for taxes from withheld shares
Payments to purchase noncontrolling interest.
Other financing, net...
(2,857)
(1)
3,126
(669)
(703)
(300)
(120)
(14)
10
Net cash provided by (used in) financing activities...
Effect of exchange rate changes on cash and cash equivalents
1,329
(8)
Change in cash and cash equivalents
Cash and cash equivalents at beginning of year
1,074
2,542
Cash and cash equivalents at end of year.
$3,616
Transcribed Image Text:STRYKER CORPORATION Consolidated Statements of Cash Flows For Year Ended December 31, 2018 (S millions) Operating activities Net earnings (loss).. Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation .. Amortization of intangible assets Share-based compensation Recall charges, net of insurance proceeds Sale of inventory stepped up to fair value at acquisition Deferred income tax benefit (expense) Changes in operating assets and liabilities Accounts receivable $3,553 306 417 119 23 16 (1,582) (60) (385) Inventories Accounts payable Accrued expenses and other liabilities Recall-related payments. Income taxes. . Other, net .... 116 289 (90) (156) 44 Net cash provided by operating activities. 2,610 Investing activities Acquisitions, net of cash acquired Purchases of marketable securities. (2,451) (226) 394 Proceeds from sales of marketable securities Purchases of property, plant and equipment Other investing, net .. (572) (2) Net cash used in investing activities. Financing activities Proceeds and payments on short-term borrowings, net. Proceeds from issuance of long-term debt.. Payments on long-term debt Dividends paid Repurchase of common stock. Cash paid for taxes from withheld shares Payments to purchase noncontrolling interest. Other financing, net... (2,857) (1) 3,126 (669) (703) (300) (120) (14) 10 Net cash provided by (used in) financing activities... Effect of exchange rate changes on cash and cash equivalents 1,329 (8) Change in cash and cash equivalents Cash and cash equivalents at beginning of year 1,074 2,542 Cash and cash equivalents at end of year. $3,616
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education