Question

Analysis the statement of cash flow for AT&T and Verizon and determine if these companies used the Direct or Indirect Method or both (of calculating net cash provided by operating activities)?

Answer 1

Here is the cash flow statement of Verizon

Consolidated Statements of Cash Flows Verizon Communications Inc. and Subsidiaries Years Ended December 31, 2018 (dollars in millions) 2016 2017 2017 $ 16,039 $ 30,550 $ 13,608 16,954 440 17,403 (2,657) 389 980 231 (14,463) 1,167 117 (1,774) 15,928 2,705 (1,063) 1,420 138 (1,007) Cash Flows from Operating Activities Net Income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expense Employee retirement benefits Deferred income taxes Provision for uncollectible accounts Equity in losses of unconsolidated businesses, net of dividends received Net gain on sale of divested businesses Oath goodwill impairment Changes in current assets and liabilities, net of effects from acquisition/disposition of businesses: Accounts receivable Inventories Prepaid expenses and other Accounts payable and accrued liabilities and Other current liabilities Discretionary employee benefits contributions Other, net Net cash provided by operating activities 4,591 (5,067) (2,667) (324) (5,674) 168 1,777 (1,679) 219 34,339 (459) (3,411) 676 24,318 (660) (1,089) (186) (3,099) 21,689 Cash Flows from Investing Activities Capital expenditures including capitalized software) Acquisitions of businesses, net of cash acquired Acquisitions of wireless licenses Proceeds from dispositions of businesses Other, net Net cash used in investing activities (16,658) (230) (1,429) (17,247) (5,880) (583) 3,614 1,640 (18,456) (17,059) (3,765) (534) 9,882 1,602 (9,874) 383 (17,934) 12,964 4,986 (19,159) Cash Flows from Financing Activities Proceeds from long-term borrowings Proceeds from asset-backed long-term borrowings Repayments of long-term borrowings and capital lease obligations Repayments of asset-backed long-term borrowings Dividends paid Other, net Net cash used in financing activities 5,967 4,810 (10,923) (3,635) (9,772) (1,824) (15,377) 27,707 4,290 (23,837) (400) (9,472) (4,439) (6,151) (9,262) (2,905) (13,376) 1,028 Increase (decrease) in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash, beginning of period Cash, cash equivalents and restricted cash, end of period (Note 1) 2.888 (289) 3,177 2,888 (1,561) 4,738 3,177 $ 3,916 $ $

Here is the cash flow statement for AT&T

AT&T Inc. Consolidated Statements of Cash Flows Dollars in millions 2018 2017 2016 $ 19,953 $ 29,847 $ 13,333 24,387 25,847 28,430 3,772 292 1,791 610 (739) (3,412) Operating Activities Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Amortization of film and television costs Undistributed earnings from investments in equity affiliates Provision for uncollectible accounts Deferred income tax expense (benefit) Net (gain) loss from sale of investments, net of impairments Actuarial (gain) loss on pension and postretirement benefits Asset abandonments and impairments Changes in operating assets and liabilities: Accounts receivable Other current assets and theatrical film and television production costs Accounts payable and other accrued liabilities Equipment installment receivables and related sales Deferred customer contract acquisition and fulfillment costs Retirement benefit funding Other - net Total adjustments Net Cash Provided by Operating Activities 174 1,642 (15,940) (282) 1,258 2,914 (37) 1,474 2,947 (169) 1,024 361 (1,244) (6,442) 1,602 (490) (3,458) (500) 3,391 23.649 43,602 (986) (778) 816 (1,239) (1,422) (1,066) (1,315) 8,163 38,010 (1,003) 1,709 118 (1,307) (2,359) (910) (2,586) 25,109 38,442 Investing Activities Capital expenditures: Purchase of property and equipment Interest during construction Acquisitions, net of cash acquired Dispositions (Purchases) sales of securities, net Advances to and investments in equity affiliates Cash collections of deferred purchase price Other (21,516) (892) (2,959) (20,647) (903) 1,123 59 449 (20,758) (493) (43,309) 2,148 (185) (1,050) 500 2 (63,145) 646 672 976 731 (18,943) (23,318) Financing Activities Net change in short-term borrowings with original maturities of three months or less Issuance of other short-term borrowings Repayment of other short-term borrowings Issuance of long-term debt Repayment of long-term debt Purchase of treasury stock Issuance of treasury stock Dividends paid Other Net Cash (Used in) Provided by Financing Activities Net (decrease) increase in cash and cash equivalents and restricted cash Cash and cash equivalents and restricted cash beginning of year Cash and Cash Equivalents and Restricted Cash End of Year 48,793 (12,339) (463) 10,140 (10,823) (512) (821) 4,898 (2,098) 41,875 (52,643) (609) 745 (13,410) (3,926) (25,989) (45,532) 50,932 5,400 33 146 (12,038) 1,946 25,930 44,997 5.935 50,932 (11,797) (1,616) (14,462) 662 5,273 5,935 $ $ $

As can be clearly seen both the companies used the INDIRECT method for calculating the cash flow from Oprating Activities