Question :
1. Given the following income statement and balance sheet data, select which items would be included in presenting the cash flow from operating activities section of the associated statement of cash flows:
|
Income Statement ($ millions)
|
2017
|
|
Sales
|
$50,000
|
|
Less: Cost of goods sold
|
33,400
|
|
Gross profits
|
16,600
|
|
Less: Cash operating expenses
|
13,600
|
|
Less: Depreciation expense
|
920
|
|
Less: Amortization of intangible assets
|
80
|
|
Operating profits (EBIT)
|
2,000
|
|
Less: Interest expense
|
290
|
|
Equity in earnings (loss) of affiliate
|
(50)
|
|
Gain (loss) on sale of fixed assets
|
80
|
|
Earnings before tax expense
|
1,740
|
|
Income tax expense
|
540
|
|
Net income
|
$1,200
|
|
Balance Sheet ($ millions)
|
2017
|
2016
|
|
|
2017
|
2016
|
|
Cash & equivalents
|
$500
|
$600
|
|
Accounts payable
|
$1,820
|
$2,200
|
|
Marketable securities
|
450
|
360
|
|
Other accrued expenses
|
2,180
|
2,050
|
|
Net receivables
|
4,200
|
4,050
|
|
Current portion of long-term debt
|
330
|
490
|
|
Inventories
|
6,110
|
6,190
|
|
Short-term debt
|
300
|
190
|
|
Other current assets
|
820
|
580
|
|
Other current liabilities
|
620
|
760
|
|
Total current assets
|
12,080
|
11,780
|
|
Total current liabilities
|
5,250
|
5,690
|
|
Gross fixed assets
|
22,320
|
20,860
|
|
Long-term debt
|
5,750
|
5,630
|
|
Less: Accum. depreciation
|
10,540
|
10,100
|
|
Deferred taxes
|
2,200
|
2,130
|
|
Net fixed assets
|
11,780
|
10,760
|
|
Other long-term liabilities
|
1,900
|
1,750
|
|
Investments in affiliates
|
480
|
530
|
|
Total liabilities
|
15,100
|
15,200
|
|
Intangible assets
|
600
|
680
|
|
Common stock
|
500
|
400
|
|
Other long-term assets
|
60
|
250
|
|
Additional paid-in capital
|
1,700
|
1,200
|
|
Total assets
|
$25,000
|
$24,000
|
|
Retained earnings
|
7,700
|
7,200
|
|
|
|
|
|
Total stockholders' equity
|
9,900
|
8,800
|
|
|
|
|
|
Total liabilities and equity
|
$25,000
|
$24,000
|
Add-back depreciation expense of $920
subtract depreciation expense of $920
add-back amortization of intangible assets of $80
subtract amortization of intangible assets of $80
subtract earnings recognized on investments in affiliates (equity in earnings of affiliate) of $50
add earnings recognized on investments in affiliates (equity in earnings of affiliate) of $50
add change in receivables of $150
subtract change in receivables of $150
add change in inventories of $80
subtract change in inventories of $80
add change in other current assets of $240
subtract change in other current assets of $240
add change in other noncurrent assets of $190
subtract change in other noncurrent assets of $190
add change in accounts payable of $380
subtract change in accounts payable of $380
add change in accrued expenses of $130
subtract change in accrued expenses of $130
add change in other current liabilities of $140
subtract change in other current liabilities of $140
add change in deferred taxes of $70
subtract change in deferred taxes of $70
add change in other noncurrent liabilities of $150
subtract change in other noncurrent liabilities of $150
add-back interest expense of $290
add gain on sale of fixed assets of $80
subtract gain on sale of fixed assets of $80