Question

Can someone help me and create a cash flow statement for the following Income statement & Balance sheet for years 2007 & 2008?

Exhibit 1 INCOME STATEMENTS 2006 $16,200 10,445 $5,755 3,054 396 $2,305 2007 $17,450 11,956 $5,494 3,130 | 720 $1,644 2008 $16,500 11,950 $4,550 3,379 | 756 $415 Net Sales Cost of Goods Sold Gross Profit Selling and Administration Depreciation Operating Income Other Income Interest Income Other Expense Interest Expense Income Before Taxes Income Taxes Net income 21 10 407 $10 246 $2,080 624 $1,456 291 $1,363 409 $954 $7 Exhibit 2 BALANCE SHEETS 2006 | 2007 | 2008 $234 1,034 3,250 L $122 488 3,450 1,350 138 1,700 143 $7,391 $61 99 2,854 1,395 42 1,200 188 $5,839 L 200 2,030 182 $7,955 | Current Assets Cash Temporary Investment Accounts Receivable, Net Raw Materials Inventory WIP Inventory Finished Goods Inventory Prepaid Expenses Total Current Assets Fixed Assets Land , Plant, and Equipment Less: Accumulative Depreciation Net Land, Plant, Equipment Total Assets Current Liabilities Accounts Payable Income Taxes Payable Current Portion of Long-term Debt Total Current Liabilities Long-term Liabilities Shareholders' Equity Common Shares Retained Earnings Total Shareholders' Equity Total Liabilities and Shareholders' Equity $4,893 1,380 3,513 $11,468 $7,076 2,100 4,976 $12,367 9,590 2,856 6,734 $12,573 $534 54 1,000 $1,588 3,190 $543 35 1,145 $1,723 | 3,500 500 23 1,340 $1,863 4,059 1,350 5,340 $6,690 $11,468 1,350 1,350 5,794 5,301 $7,144 $6,651 $12,367 | $12,573

Answer 1

($ in Millions) Statement of Cash Flows for the Year Ending 2007 Indirect Method Particulars Cash Flow From Operating Activities Net Income After Tax Add : Tax Expense Net Income Before Tax 954 409 1,363 720 291 (10) 2,364 Adjustments to reconcile Net Income :- 1 Add :Depreciation Expense 2 Add: Interest Exp. Paid 3 Less : Interest Income 4 Operating Profit before working capital changes 5 Changes in Working Capital :- 5 Increase in Raw Material Inventory Decrease in WIP Inventory 3 Decrease in Finished Goods Inventory Increase in Account Receivable Decrease in Prepaid Expenses 1 Increase in current portion of Long term debt 2 Increase in Account Payable 3 Total (325) 62 330 (200) 39 145 2,424 5 Less : Tax Paid (Working Note 1) 5 Net Cash Flow From Operating Activities(A) (428) 1,996 sm

(2,183) 10 (2,173) 35 Cash Flow From Investing Activities 36 Purchase of Plant & Equipments [$ 7076 - $ 4893 ] 37 Interest Income 38 Net Cash Flow From Investing Activities (B) 39 40 Cash Flow From Financing Activities 41 Cash Received due to increase in Long term Liabilities 42 Cash Dividends Paid (Working Note 2) 43 Interest Expense Paid 44 Net Cash Flow From Financing Activities (C) 310 (500) (291) (481) 45 46 Net Cash Flows from All Activities (A+B+C) 47 Cash & cash equivalents at the beginning of the period (W Note 3) 48 Cash & cash equivalents at the End of the period (W Note 4) 49 (658) 1,268 610 52

54 Working Note 1 Calculation of Income Tax Paid - Income Tax Payable (Beginning Balance 2006) Add: Provision for Income Tax Total Less : Income Tax Payable (Ending Balance 2007) Income Tax Paid During the Year 409 463 (35) 428 Working Note 2 Calculation of Dividend Paid Retained Earnings (Beginning Balance 2006) Add : Net Income Total Less : Retained Earnings (Ending Balance 2007) Dividend Paid During the Year 5,340 954 6,294 (5,794) 500

Working Note 3 Calculation of Cash & Cash Equivalents at the beginning of the year 1 Cash (2006) 2 Temporary Investment (2006) 3 Total Cash & Cash Equivalents at the beginning of the year 234 1034 1,268 5 Working Note 4 7 Calculation of Cash & Cash Equivalents at the End of the year 3 Cash (2007) Temporary Investment (2007) Total Cash & Cash Equivalents at the End of the year 122 488 610 olm

A Statement of Cash Flows for the Year Ending 2008 Indirect Method L00 Particulars _01 Cash Flow From Operating Activities -02 Net Income After Tax L03 Add : Tax Expense L04 Net Income Before Tax ($ in Millions) -05 756 407 (2) 1,171 -06 Adjustments to reconcile Net Income :- L07 Add :Depreciation Expense -08 Add: Interest Exp. Paid -09 Less : Interest Income -10 Operating Profit before working capital changes 11 Changes in Working Capital :- 12 Increase in Raw Material Inventory 13 Decrease in WIP Inventory -14 Decrease in Finished Goods Inventory -15 Decrease in Account Receivable -16 Increase in Prepaid Expenses -17 Increase in current portion of Long term debt 18 Decrease in Account Payable 19 Total _20 -21 Less : Tax Paid (Working Note 1) -22 Net Cash Flow From Operating Activities(A) (45) 96 500 596 (45) 195 (43) 2,425 (15) 2,410

mm (2,514) 1 Cash Flow From Investing Activities 2 Purchase of Plant & Equipments [$ 9590 - $ 7076] 3 Interest Income 4 Net Cash Flow From Investing Activities (B) (2,512) 5 Cash Flow From Financing Activities Cash Received due to increase in Long term Liabilities 3 Cash Dividends Paid (Working Note 2) Interest Expense Paid Net Cash Flow From Financing Activities (C) 559 (500) (407) (348) 2 Net Cash Flows from All Activities (A+B+C) 3 Cash & cash equivalents at the beginning of the period (W Note 3) 4 Cash & cash equivalents at the End of the period (W Note 4) (450) 610 160 in mm

154 155 156 Working Note 1 157 Calculation of Income Tax Paid 158 Income Tax Payable (Beginning Balance 2007) 159 Add : Provision for Income Tax 160 Total 161 Less Income Tax Payable (Ending Balance 2008) 162 Income Tax Paid During the Year 163 164 165 Working Note 2 166 Calculation of Dividend Paid 167 168 Retained Earnings (Beginning Balance 2007) 169 Add: Net Income 170 Total 171 Less : Retained Earnings (Ending Balance 2008) 172 Dividend Paid During the Year 173 170 5,794 5,801 (5,301) 500

IJ 174 175 Working Note 3 176 Calculation of Cash & Cash Equivalents at the beginning of the year 177 Cash (2007) 178 Temporary Investment (2007) 179 Total Cash & Cash Equivalents at the beginning of the year 180 122 488 610 182 Working Note 4 183 Calculation of Cash & Cash Equivalents at the End of the year 184 Cash (2008) 185 Temporary Investment (2008) 186 Total Cash & Cash Equivalents at the End of the year 61 99 160 188 189 190