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Stryker paid $300 million to repurchase its common stock in fiscal 2018 and, in addition, paid dividends of $703 million. Thus, it paid $1.003 million of cash to its stockholders during the year. How do we evaluate that use of cash relative to other possible uses for the company's cash?

Stryker paid $300 million to repurchase its common stock in fiscal 2018 and, in addition, paid dividends of $703 million. Thus, it paid $1.003 million of cash to its stockholders during the year. How do we evaluate that use of cash relative to other possible uses for the company's cash?

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter11: The Statement Of Cash Flows
Section: Chapter Questions
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A) Stryker paid $300 million to repurchase its common stock in fiscal 2018 and, in addition, paid dividends of $703 million. Thus, it paid $1.003 million of cash to its stockholders during the year. How do we evaluate that use of cash relative to other possible uses for the company's cash?

B) Provide an overall assessment of the company's cash flows for fiscal 2018. In the analysis, consider the sources and uses of cash.

STRYKER CORPORATION Consolidated Statements of Cash Flows For Year Ended December 31, 2018 (S millions) Operating activities Net earnings (loss).. Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation .. Amortization of intangible assets Share-based compensation Recall charges, net of insurance proceeds Sale of inventory stepped up to fair value at acquisition Deferred income tax benefit (expense) Changes in operating assets and liabilities Accounts receivable $3,553 306 417 119 23 16 (1,582) (60) (385) Inventories Accounts payable Accrued expenses and other liabilities Recall-related payments. Income taxes. . Other, net .... 116 289 (90) (156) 44 Net cash provided by operating activities. 2,610 Investing activities Acquisitions, net of cash acquired Purchases of marketable securities. (2,451) (226) 394 Proceeds from sales of marketable securities Purchases of property, plant and equipment Other investing, net .. (572) (2) Net cash used in investing activities. Financing activities Proceeds and payments on short-term borrowings, net. Proceeds from issuance of long-term debt.. Payments on long-term debt Dividends paid Repurchase of common stock. Cash paid for taxes from withheld shares Payments to purchase noncontrolling interest. Other financing, net... (2,857) (1) 3,126 (669) (703) (300) (120) (14) 10 Net cash provided by (used in) financing activities... Effect of exchange rate changes on cash and cash equivalents 1,329 (8) Change in cash and cash equivalents Cash and cash equivalents at beginning of year 1,074 2,542 Cash and cash equivalents at end of year. $3,616
Transcribed Image Text:STRYKER CORPORATION Consolidated Statements of Cash Flows For Year Ended December 31, 2018 (S millions) Operating activities Net earnings (loss).. Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation .. Amortization of intangible assets Share-based compensation Recall charges, net of insurance proceeds Sale of inventory stepped up to fair value at acquisition Deferred income tax benefit (expense) Changes in operating assets and liabilities Accounts receivable $3,553 306 417 119 23 16 (1,582) (60) (385) Inventories Accounts payable Accrued expenses and other liabilities Recall-related payments. Income taxes. . Other, net .... 116 289 (90) (156) 44 Net cash provided by operating activities. 2,610 Investing activities Acquisitions, net of cash acquired Purchases of marketable securities. (2,451) (226) 394 Proceeds from sales of marketable securities Purchases of property, plant and equipment Other investing, net .. (572) (2) Net cash used in investing activities. Financing activities Proceeds and payments on short-term borrowings, net. Proceeds from issuance of long-term debt.. Payments on long-term debt Dividends paid Repurchase of common stock. Cash paid for taxes from withheld shares Payments to purchase noncontrolling interest. Other financing, net... (2,857) (1) 3,126 (669) (703) (300) (120) (14) 10 Net cash provided by (used in) financing activities... Effect of exchange rate changes on cash and cash equivalents 1,329 (8) Change in cash and cash equivalents Cash and cash equivalents at beginning of year 1,074 2,542 Cash and cash equivalents at end of year. $3,616
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