Reporting and Interpreting Cash Flows from Investing and Financing Activities with Discussion of Management Strategy
Gibraltar Industries is a Buffalo, New York-based manufacturer of high-value-added steel products. In a recent year, it reported the following activities:
Acquisitions (investments in other companies) | $(8,724) |
Decrease in inventories | 1,770 |
Depreciation and amortization | 33,907 |
Long-term debt reduction | 185,567 |
Net cash provided by operating activities | 107,874 |
Net income | 24,068 |
Net proceeds from issuance of common stock | 250 |
Net proceeds from sale of property and equipment | 2,692 |
Payment of dividends | (5,985) |
Proceed s from long-term debt | 53,439 |
Proceeds from sale of other equity investments | 34,701 |
Purchases of property, plant. and equipment | (21,595) |
Required:
1. Based on this information, present the cash flows from investing and financing activities sections of the cash flow statement.
2. Compute the capital acquisitions ratio. What does the ratio tell you about Gibraltar’s ability to finance purchases of property, plant, and equipment with cash provided by operating activities?
3. What do you think was Gibraltar management’s plan for the use of the cash generated by selling other equity investments?
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