Question

Prepare a forecasted statement of cash flows for 2017 using the indirect method. Assume the following:

• Operating expenses for 2017 (such as general and administrative) include depreciation and amortization expense of $522 million.

• The company did not dispose of or write-down any long-term assets during the year.

• The company paid dividends of $159 million in 2017

P11-47. Statement of Cash Flows (Indirect Method) Following are the income statement and balance sheet for Whole Foods Market Inc., for the year ended September 25, 2016, and a forecasted income statement and balance sheet for 2017. WHOLE FOODS MARKET INC. Income Statement $ millions 2017 Est. 2016 Actual $15,724 10,313 5,411 4,477 64 13 857 (41) $15.881 10,418 5,463 4,526 Sales. Cost of goods sold and occupancy costs................. Gross profit. Selling, general and administrative expenses.. Pre-opening expenses... Relocation, store closure and lease termination costs ....... Operating income.... Interest expense............................ . Investment and other income...................... Income before income taxes ............. Provision for income taxes........................ Net income.......... ........... ..... 64 873 (41) 11 843 827 320 312 $507 $531

Answer 1

Cash flow from Operating Activities
Net Income	531
Add: Depreciation	522
Add: Pre opening expenses
Changes in working capital
Increase in accounts receivable	-44
Increase in inventories	-7
Increase in prepaid income	-8
Increase in deferred taxes	-4
Increase in accounts payable	11
Increase in accrued payroll	6
Decrease in dividend payable	-3
Increase in other current liabilities	7
Cash flow from Operating Activities	1011
Cash flow from Investing Activities
Purchase of assets	-794
Cash used in investing activities	-794
Cash flow from Financing Activities
Repayment of debt	-3
Dividend paid	-159
Purchase of treasury stock	-200
Cash used in financing activities	-362
Net change in cash	-145
Opening cash and equivalents	852
Closing cash and equivalents	707