BBA 3301 Unit II Assignment
ACE.M3-15.rtf
- 3–15. (Analyzing the cash flow statement) The cash flow statements for retailing giant BigBox, Inc., spanning the period 2013–2016 are as follows:
(US$ millions)
12/31/2016
12/31/2015
12/31/2014
12/31/2013
Net income
$ 13,000
$ 12,000
$ 11,000
$ 10,000
Depreciation expense
6,500
6,300
5,000
4,000
Changes in working capital
1,200
2,300
2,400
1,000
Cash flow from operating activities
$ 20,700
$ 20,600
$ 18,400
$ 15,000
Capital expenditures
$ (16,000)
$ (14,500)
$ (14,000)
$ (12,300)
Cash flow from investing activities
$ (16,000)
$ (14,500)
$ (14,000)
$ (12,300)
Interest and financing cash flow items
$ (350)
$ (250)
$ (350)
$ 100
Total cash dividends paid
(3,600)
(2,800)
(2,500)
(2,200)
Issuance (retirement) of stock
(8,000)
(1,500)
(3,600)
(4,500)
Issuance (retirement) of debt
1,500
(100)
4,000
4,100
Cash flow from financing activities
$ (10,450)
$ (4,650)
$ (2,450)
$ (2,500)
Net change in cash
$ (5,750)
$ 1,450
$ 1,950
$ 200
Answer the following questions using the information found in these statements:
- Does BigBox generate positive cash flow from its operations?
How much did BigBox invest in new capital expenditures over these four years?
Describe BigBox’s sources of financing in the financial markets over these four years.
Based solely on the cash flow statements for 2013 through 2016, write a brief narrative that describes the major activities of BigBox’s management team over these four years.
3–16. (Analyzing the Quality of Firm Earnings) The Mitchell Electric Company had net income of $750,000, cash flow from financing activities of $150,000, a depreciation expense of $50,000, and cash flow from operating activities of $575,000.
Calculate the firm’s quality of earnings ratio. What does this ratio tell you?
Mitchell reported the following in its annual reports for 2014–2016:
($ millions)
2014
2015
2016
Cash flow from operations
$478
$403
$470
Capital expenditures (CAPEX)
$459
$447
$456
Calculate the average capital acquisitions ratio over the three-year period. How would you interpret these results?