BBA 3301 Unit II Assignment

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3-15.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?