Chapter 1, Problem 1.17E

Below are approximate amounts related to cash flow information reported by five companies in previous years.

  1.    Kraft Foods reports operating cash flows of $3.6 billion, investing cash flows of $0.6 billion, and financing cash flows of –$4.2 billion. What is the amount of the change in total cash?

  2.    Sara Lee reports operating cash flows of $1.4 billion, investing cash flows of –$0.3 billion, and financing cash flows of –$1.4 billion. If the beginning cash amount is $0.7 billion, what is the ending cash amount?

  3.    Performance Food Group reports operating cash flows of $0.07 billion, investing cash flows of $0.63 billion, and a change in total cash of $0.04 billion. What is the amount of cash flows from financing activities?

  4.    Smithfield Foods reports operating cash flows of $0.60 billion, financing cash flows of $0.42 billion, and a change in total cash of $0.02 billion. What is the amount of cash flows from investing activities?

  5.    Tyson Foods reports investing cash flows of –$1.42 billion, financing cash flows of $1.03 billion, and a change in total cash of $0.02 billion. What is the amount of cash flows from operating activities?

  Required:

  Calculate the answer to each.

To determine

Statement of cash flows: This statement reports all the cash transactions which are responsible for inflow and outflow of cash, and result of these transactions is reported as ending balance of cash at the end of reported period.

To Calculate: The amount of change in the total cash of K Foods.

Answer to Problem 1.17E

The amount of change in the total cash of K Foods is $2.8 billion.

Explanation of Solution

Calculate the amount of change in the total cash of K Foods.

$\begin{array}{c}\text{ Total Change in Cash = }\left(\begin{array}{l}\text{Net Operating Cash Flow + }\\ \text{Net Investing Cash Flow +}\\ \text{Net Financing Cash Flow}\end{array}\right)\\ \text{= \$3}\text{.6 billion +\$0}\text{.6 billion }-\text{\$1}\text{.4 billion}\\ =\$\text{4}\text{.2 billion}-\text{\$1}\text{.4 billion}\\ \text{= \$2}\text{.8 billion}\end{array}$

Conclusion

Thus, the amount of change in the total cash of K Foods is $2.8billion.

To determine

Statement of cash flows: This statement reports all the cash transactions which are responsible for inflow and outflow of cash, and result of these transactions is reported as ending balance of cash at the end of reported period.

To Calculate: The ending cash amount of Company SL.

Answer to Problem 1.17E

The ending cash amount of Company SL is $0.4 billion.

Explanation of Solution

Calculate the ending cash amount of Company SL, using the Statement of cash flow.

Company SL
Statement of Cash Flows
Particulars	Amount ($)	Amount ($)
Net cash flows from operating activities		$1,400,000,000
Net cash flows from investing activities		($300,000,000)
Net cash flows from financing activities		($1,400,000,000)
Net decrease in cash		($300,000,000)
Opening Cash Balance		$700,000,000
Closing Cash Balance		$400,000,000

Conclusion

Thus, the ending cash amount of Company SL is $0.4 billion.

To determine

Financing activities: Financing activities refer to the activities carried out by a company to mobilize funds to carry out the business activities. The examples for financing activities are purchase of bonds, issuance of common shares, and others.

To Calculate: The net amount of cash flows from financing activities, of PF Group.

Answer to Problem 1.17E

The net amount of cash flows from financing activities, of PF Group is $0.66 billion.

Explanation of Solution

Calculate the net amount of cash flows from financing activities, of PF Group.

$\begin{array}{c}\text{ Net Financing Cash Flow = }\left(\begin{array}{l}\left(\begin{array}{l}\text{Net Operating Cash Flow + }\\ \text{Net Investing Cash Flow}\end{array}\right)\\ -\text{Total Change in Cash}\end{array}\right)\\ \text{= }\left(\text{\$0}\text{.07 billion +\$0}\text{.63 billion}\right)-\text{\$0}\text{.04 billion}\\ =\$\text{0}\text{.7 billion}-\text{\$0}\text{.04 billion}\\ \text{= \$0}\text{.66 billion}\end{array}$

Conclusion

Thus, the net amount of cash flows from financing activities, of PF Group is $0.66 billion.

To determine

Investing activities: Investing activities refer to the activities carried out by a company for acquisition of long term assets. The examples for investing activities are purchase of equipment, long term investment, sale of land, and others.

To Calculate: The net amount of cash flows from investing activities, of S Foods.

Answer to Problem 1.17E

The net amount of cash flows from investing activities, of S Foods is $1 billion.

Explanation of Solution

Calculate the net amount of cash flows from investing activities, of S Foods.

$\begin{array}{c}\text{ Net Investing Cash Flow = }\left(\begin{array}{l}\left(\begin{array}{l}\text{Net Operating Cash Flow + }\\ \text{Net Financing Cash Flow}\end{array}\right)\\ -\text{Total Change in Cash}\end{array}\right)\\ \text{= }\left(\text{\$0}\text{.60 billion +\$0}\text{.42 billion}\right)-\text{\$0}\text{.02 billion}\\ =\$\text{1}\text{.02 billion}-\text{\$0}\text{.02 billion}\\ \text{= \$1 billion}\end{array}$

Conclusion

Thus, the net amount of cash flows from investing activities, of S Foods is $1 billion.

To determine

Operating activities: Operating activities refer to the normal activities of a company to carry out the business. The examples for operating activities are purchase of inventory, payment of salary, sales, and others.

To Calculate: The net amount of cash flows from operating activities, of T Foods.

Answer to Problem 1.17E

The net amount of cash flows from operating activities, of T Foods is $0.41 billion.

Explanation of Solution

Calculate the net amount of cash flows from operating activities, of T Foods.

$\begin{array}{c}\text{ Net Operating Cash Flow = }\left(\begin{array}{l}\left(\begin{array}{l}\text{Net Financing Cash Flow + }\\ \text{Net Investing Cash Flow}\end{array}\right)\\ -\text{Total Change in Cash}\end{array}\right)\\ \text{= }\left(\text{\$1}\text{.03 billion }-\text{\$1}\text{.42 billion}\right)-\text{\$0}\text{.02 billion}\\ =-\text{\$0}\text{.39 billion}-\text{\$0}\text{.02 billion}\\ \text{= \$0}\text{.41 billion}\end{array}$

Conclusion

Thus, the net amount of cash flows from operating activities, of T Foods is $0.41 billion.