You become an investment advisor in one of the prominent financial institutions; a client wants to know if he should invest in Qualcomm or AMD, which operate in the same industry.He presents you with the Form 10-Q of both companies. Using ONLY the Consolidated Statements of Cash Flows to decide, what will you tell your client? UALCOMM IncorporatedCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In millions)(Unaudited) Nine Months Ended June 26,2022 June 27,2021Operating Activities: Net income$10,063 $6,245 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expense1,272 1,157 Income tax provision less than income tax payments(234) (358) Share-based compensation expense1,510 1,238 Net losses (gains) on marketable securities and other investments374 (487) Other items, net— (49) Changes in assets and liabilities: Accounts receivable, net(216) 1,052 Inventories(2,201) (509) Other assets(2,360) 39 Trade accounts payable948 449 Payroll, benefits and other liabilities(1,274) 805 Unearned revenues(232) (123) Net cash provided by operating activities7,650 9,459 Investing Activities: Capital expenditures(1,628) (1,458) Purchases of debt and equity marketable securities(1,269) (5,458) Proceeds from sales and maturities of debt and equity marketable securities1,960 4,482 Acquisitions and other investments, net of cash acquired(4,743) (1,284) Proceeds from other investments125 234 Other items, net41 78 Net cash used by investing activities(5,514) (3,406) Financing Activities: Proceeds from short-term debt3,065 2,185 Repayment of short-term debt(3,066) (2,185) Repayment of debt of acquired company(349) — Proceeds from long-term debt1,477 — Repayment of long-term debt(1,540) — Proceeds from issuance of common stock188 174 Repurchases and retirements of common stock(2,629) (2,595) Dividends paid(2,371) (2,240) Payments of tax withholdings related to vesting of share-based awards(751) (710) Other items, net(28) (25) Net cash used by financing activities(6,004) (5,396) Effect of exchange rate changes on cash and cash equivalents(50) 35 Net (decrease) increase in total cash and cash equivalents(3,918) 692 Total cash and cash equivalents at beginning of period7,116 6,707 Total cash and cash equivalents at end of period (including $522 million classified as held for sale)$3,198 $7,399 Advanced Micro Devices, Inc.Condensed Consolidated Statements of Cash Flows(Unaudited) Nine Months Ended September 24,2022 September 25,2021 (In millions)Cash flows from operating activities: Net income$1,299 $2,188 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization2,954 289 Stock-based compensation766 267 Amortization of operating lease right-of-use assets63 40 Amortization of inventory fair value adjustment187 — Loss on debt redemption, repurchase and conversion— 7 Loss on sale or disposal of property and equipment15 19 Deferred income taxes(1,328) 201 (Gains) losses on equity investments, net57 (52) Other(9) (2) Changes in operating assets and liabilities Accounts receivable, net(1,301) (158) Inventories(997) (504) Receivables from related parties(1) 5 Prepaid expenses and other assets(825) (284) Payables to related parties313 (42) Accounts payable811 526 Accrued liabilities and other994 199 Net cash provided by operating activities2,998 2,699 Cash flows from investing activities: Purchases of property and equipment(326) (215) Purchases of short-term investments(2,399) (1,901) Proceeds from maturity of short-term investments2,864 1,428 Cash received from acquisition of Xilinx2,366 — Acquisition of Pensando, net of cash acquired(1,558) — Other(15) 2 Net cash provided by (used in) investing activities932 (686) Cash flows from financing activities: Proceeds from debt, net of issuance costs991 — Repayment of debt(312) — Proceeds from sales of common stock through employee equity plans79 55 Repurchases of common stock(3,452) (1,004) Common stock repurchases for tax withholding on employee equity plans(371) (219) Other(2) — Net cash used in financing activities(3,067) (1,168) Net increase in cash and cash equivalents863 845 Cash and cash equivalents at beginning of period2,535 1,595 Cash and cash equivalents at end of period$3,398 $2,440

Looking at the cash flows, We can clearly see, that the net income for Qualcomm has increased…

Answered: You become an investment advisor in one…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

You become an investment advisor in one of the prominent financial institutions; a client wants to know if he should invest in Qualcomm or AMD, which operate in the same industry.

He presents you with the Form 10-Q of both companies. Using ONLY the Consolidated Statements of Cash Flows to decide, what will you tell your client?

UALCOMM Incorporated

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


	Nine Months Ended
	June 26, 2022		June 27, 2021
Operating Activities:
Net income	$	10,063			$	6,245
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	1,272			1,157
Income tax provision less than income tax payments	(234)			(358)
Share-based compensation expense	1,510			1,238
Net losses (gains) on marketable securities and other investments	374			(487)
Other items, net	—			(49)
Changes in assets and liabilities:
Accounts receivable, net	(216)			1,052
Inventories	(2,201)			(509)
Other assets	(2,360)			39
Trade accounts payable	948			449
Payroll, benefits and other liabilities	(1,274)			805
Unearned revenues	(232)			(123)
Net cash provided by operating activities	7,650			9,459
Investing Activities:
Capital expenditures	(1,628)			(1,458)
Purchases of debt and equity marketable securities	(1,269)			(5,458)
Proceeds from sales and maturities of debt and equity marketable securities	1,960			4,482
Acquisitions and other investments, net of cash acquired	(4,743)			(1,284)
Proceeds from other investments	125			234
Other items, net	41			78
Net cash used by investing activities	(5,514)			(3,406)
Financing Activities:
Proceeds from short-term debt	3,065			2,185
Repayment of short-term debt	(3,066)			(2,185)
Repayment of debt of acquired company	(349)			—
Proceeds from long-term debt	1,477			—
Repayment of long-term debt	(1,540)			—
Proceeds from issuance of common stock	188			174
Repurchases and retirements of common stock	(2,629)			(2,595)
Dividends paid	(2,371)			(2,240)
Payments of tax withholdings related to vesting of share-based awards	(751)			(710)
Other items, net	(28)			(25)
Net cash used by financing activities	(6,004)			(5,396)
Effect of exchange rate changes on cash and cash equivalents	(50)			35
Net (decrease) increase in total cash and cash equivalents	(3,918)			692
Total cash and cash equivalents at beginning of period	7,116			6,707
Total cash and cash equivalents at end of period (including $522 million classified as held for sale)	$	3,198			$	7,399

Advanced Micro Devices, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended
	September 24, 2022		September 25, 2021
	(In millions)
Cash flows from operating activities:
Net income	$	1,299			$	2,188
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	2,954			289
Stock-based compensation	766			267
Amortization of operating lease right-of-use assets	63			40
Amortization of inventory fair value adjustment	187			—
Loss on debt redemption, repurchase and conversion	—			7
Loss on sale or disposal of property and equipment	15			19
Deferred income taxes	(1,328)			201
(Gains) losses on equity investments, net	57			(52)
Other	(9)			(2)
Changes in operating assets and liabilities
Accounts receivable, net	(1,301)			(158)
Inventories	(997)			(504)
Receivables from related parties	(1)			5
Prepaid expenses and other assets	(825)			(284)
Payables to related parties	313			(42)
Accounts payable	811			526
Accrued liabilities and other	994			199
Net cash provided by operating activities	2,998			2,699
Cash flows from investing activities:
Purchases of property and equipment	(326)			(215)
Purchases of short-term investments	(2,399)			(1,901)
Proceeds from maturity of short-term investments	2,864			1,428
Cash received from acquisition of Xilinx	2,366			—
Acquisition of Pensando, net of cash acquired	(1,558)			—
Other	(15)			2
Net cash provided by (used in) investing activities	932			(686)
Cash flows from financing activities:
Proceeds from debt, net of issuance costs	991			—
Repayment of debt	(312)			—
Proceeds from sales of common stock through employee equity plans	79			55
Repurchases of common stock	(3,452)			(1,004)
Common stock repurchases for tax withholding on employee equity plans	(371)			(219)
Other	(2)			—
Net cash used in financing activities	(3,067)			(1,168)
Net increase in cash and cash equivalents	863			845
Cash and cash equivalents at beginning of period	2,535			1,595
Cash and cash equivalents at end of period	$	3,398			$	2,440

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