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In its 2012 report, Volkswagen included the following cash-flow statement (in millions)


 2012 2011
Profit before taxes 25492 18926
Income taxes paid (5056) (3269)
Cash Flow from operating activities:

Net depreciation on intangibles, PP&E, investment property 7617 5969
Net depreciation on capitalized development cost 1903 1697
Net depreciation on leased assets 3594 2667
Gains from At Equity Investments (11512) (715)
Other changes in accruals (2043) (6446)
Changes in inventories 465 (4234)
Changes of operating receivables/liabilities (292) 836
Changes of provisions 465 3960
Changes of leased assets (5606) (4090)
Changes of financial receivables (7814) (6811)
Cash Flow from operating activities 7209 8500
Cash flow from investing activities:

Investmnets in intangibles, PP&E and investment property (10493) (8087)
Changes in capitalized development costs (2615) (1666)
Acquisition of businesses (net) (4106) (6389)
Gains from disposal of intangibles PP&E, investment property 373 140
Changes of investments in financial securities (1133) (699)
Changes of other financial assets (1510) (1931)
Cash flow from investing activities (19482) (18631)
Cash flow from financing activities:

Capital contributions 2046 3
Dividend payments (1673) (1266)
Capital transactions with non-controlling interests (2101) (355)
Issue of bonds 26055 16715
Retirements of bonds (16952) (11603)
Other changes of net debt and capital 6468 4782
Lease payments (132) 19
Cash flow from financing activities 1298 (1733)
Closing Cash 13712 16495






An analyst made a calculation of free cash flow from these numbers as follows:


 2012 2011
Cash Flow from operating activities 7209 8500
Cash flow from investing activities (19482) (18631)
Free Cash Flow (12273) (10131)

Calculate the appropriate free cash flow number (as of IFRS) for the years 2011, 2012. What mistakes is the analyst making?

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M9946369

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