Homework Help is Here – Start Your Trial Now!
Business
Accounting
Discuss the relations between net income and cash flow from operations and among cash flows from operating, investing, and financing activities for the firm over the three-year period. Identify characteristics of Coca-Cola’s cash flows that you would expect for a mature company.

Discuss the relations between net income and cash flow from operations and among cash flows from operating, investing, and financing activities for the firm over the three-year period. Identify characteristics of Coca-Cola’s cash flows that you would expect for a mature company.

Financial Reporting, Financial Statement Analysis and Valuation
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter3: Income Flows Versus Cash Flows: Understanding The Statement Of Cash Flow
Section: Chapter Questions
Problem 1HIC
See similar textbooks
icon
Related questions
Question

Interpreting the Statement of Cash Flows. The Coca-Cola Company (Coca-Cola) manufactures and markets a variety of beverages. Exhibit 3.16 presents a statement of cash flows for Coca-Cola for three years.

Required

Discuss the relations between net income and cash flow from operations and among cash flows from operating, investing, and financing activities for the firm over the three-year period. Identify characteristics of Coca-Cola’s cash flows that you would expect for a mature company.

Please explain without copying from another source!

Exhibit 3.16 The Coca-Cola Company Statement of Cash Flows (amounts in millions) (Problem 3.18) Year Ended December 31, Year 3 Year 2 Year 1 OPERATING ACTIVITIES $ 5,807 $ 5,981 $ 5,080 Net income Depreciation and amortization Stock-based compensation expense 1,228 1,163 938 266 313 324 Deferred income taxes (360) 109 (35) Equity income or loss, net of dividends Foreign currency adjustments Gains on sales of assets, including bottling interests Other operating charges 1,128 (452) 124 (42) 52 (130) (244) (303) 209 166 159 Other items 153 99 233 Net change in operating assets and liabilities Net Cash Provided by Operating Activities (688) $ 7,571 (615) $ 7,150 $ 5,957 INVESTING ACTIVITIES Acquisitions and investments, principally beverage and bottling companies and trademarks $ (759) $ (901) $(5,653) Purchases of other investments (240) (99) (82) Proceeds from disposals of bottling companies and other investments 479 448 640 Purchases of property, plant, and equipment Proceeds from disposals of property, plant, and equipment Other investing activities Net Cash Used in Investing Activities (1,968) (1,648) (1,407) 129 239 112 (4) $(2,363) (6) $(6,719) (62) $(1,700) FINANCING ACTIVITIES Issuances of debt $ 4,337 $ 9,979 $ 617 Payments of debt (4,308) (5,638) (2,021) Issuances of stock 586 1,619 148 Purchases of stock for treasury (1,079) (1,838) (2,416) Dividends (3,521) $(3,985) $ (615) (3,149) $ 973 $ 249 (2,911) Net Cash Provided by (Used in) Financing Activities Effect of exchange rate changes on cash and cash equivalents $(6,583) $ 65 CASH AND CASH EQUIVALENTS $ 1,653 $ 608 4,093 $ 4,701 $(2,261) Net Increase (Decrease) During the Year Balance at beginning of year 2,440 4,701 Balance at End of Year $ 4,093 $ 2,440 Source: The Coca-Cola Company, Form 10-K for the Fiscal Year Ended 2008.
Transcribed Image Text:Exhibit 3.16 The Coca-Cola Company Statement of Cash Flows (amounts in millions) (Problem 3.18) Year Ended December 31, Year 3 Year 2 Year 1 OPERATING ACTIVITIES $ 5,807 $ 5,981 $ 5,080 Net income Depreciation and amortization Stock-based compensation expense 1,228 1,163 938 266 313 324 Deferred income taxes (360) 109 (35) Equity income or loss, net of dividends Foreign currency adjustments Gains on sales of assets, including bottling interests Other operating charges 1,128 (452) 124 (42) 52 (130) (244) (303) 209 166 159 Other items 153 99 233 Net change in operating assets and liabilities Net Cash Provided by Operating Activities (688) $ 7,571 (615) $ 7,150 $ 5,957 INVESTING ACTIVITIES Acquisitions and investments, principally beverage and bottling companies and trademarks $ (759) $ (901) $(5,653) Purchases of other investments (240) (99) (82) Proceeds from disposals of bottling companies and other investments 479 448 640 Purchases of property, plant, and equipment Proceeds from disposals of property, plant, and equipment Other investing activities Net Cash Used in Investing Activities (1,968) (1,648) (1,407) 129 239 112 (4) $(2,363) (6) $(6,719) (62) $(1,700) FINANCING ACTIVITIES Issuances of debt $ 4,337 $ 9,979 $ 617 Payments of debt (4,308) (5,638) (2,021) Issuances of stock 586 1,619 148 Purchases of stock for treasury (1,079) (1,838) (2,416) Dividends (3,521) $(3,985) $ (615) (3,149) $ 973 $ 249 (2,911) Net Cash Provided by (Used in) Financing Activities Effect of exchange rate changes on cash and cash equivalents $(6,583) $ 65 CASH AND CASH EQUIVALENTS $ 1,653 $ 608 4,093 $ 4,701 $(2,261) Net Increase (Decrease) During the Year Balance at beginning of year 2,440 4,701 Balance at End of Year $ 4,093 $ 2,440 Source: The Coca-Cola Company, Form 10-K for the Fiscal Year Ended 2008.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 3 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Cash Flow Statement Analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
Financial Reporting, Financial Statement Analysis…
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Financial & Managerial Accounting
Financial & Managerial Accounting
Accounting
ISBN:
9781337119207
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning
Corporate Financial Accounting
Corporate Financial Accounting
Accounting
ISBN:
9781337398169
Author:
Carl Warren, Jeff Jones
Publisher:
Cengage Learning
Corporate Financial Accounting
Corporate Financial Accounting
Accounting
ISBN:
9781305653535
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS