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    Argosy University/ Phoniex University/
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    Phoniex University
    Oct-2001 - Nov-2016

Category > Management Posted 19 Jan 2018 My Price 10.00

Gap Inc

3.17    INTERPRETING THE STATEMENT OF CASH FLOWS. Gap Inc. oper- ates chains of retail clothing stores under the names of Gap, Banana Republic, and Old Navy. Exhibit 3.24 presents the statement of cash flows for Gap for Year 0 to Year 4.

 

 

 

 

 

Year 4

Year 3

Year 2

Year 1

Year 0

OPERATIONS

 

 

 

 

 

Net income (loss)

$ 1,150

$ 1,031

$  478

$      (8)

$     877

Depreciation

620

675

706

811

590

Other additions and subtractions

(28)

180

166

30

92

(Increase) Decrease in inventories

(90)

385

(258)

213

(455)

(Increase) Decrease in prepayments

(18)

5

33

(13)

(61)

Increase (Decrease) in

 

 

 

 

 

accounts payable

42

(10)

(47)

42

250

Increase (Decrease) in other

 

 

 

 

 

current liabilities

(56)

(106)

165

243

(3)

Cash Flow from Operations

$ 1,620

$ 2,160

$1,243

$1,318

$ 1,290

INVESTING

 

 

 

 

 

Fixed assets acquired

$  (442)

$  (261)

$ (308)

$ (940)

$(1,859)

Changes in marketable securities

259

(2,063)

(313)

—

—

Other investing transactions

343

6

(8)

(11)

(16)

Cash Flow from Investing

$     160

$(2,318)

$ (629)

$ (951)

$(1,875)

FINANCING

 

 

 

 

 

Increase in short-term borrowing

$       —

$       —

$      —

$      —

$     621

Increase in long-term borrowing

—

85

1,346

1,194

250

Issue of capital stock

130

26

153

139

152

Decrease in short-term borrowing

—

0

(42)

(735)

—

Decrease in long-term borrowing

(871)

(668)

—

(250)

—

Acquisition of capital stock

(976)

—

—

(1)

(393)

Dividends

(79)

(79)

(78)

(76)

(75)

Other financing transactions

—

28

27

(11)

(11)

Cash Flow from Financing

$(1,796)

$  (608)

$1,406

$  260

$     544

Change in Cash

$      (16)

$  (766)

$2,020

$  627

$      (41)

Cash—Beginning of year

2,261

3,027

1,007

380

421

Cash—End of Year

$ 2,245

$ 2,261

$3,0.27

$1,007

$     380

Change in sales from previous year

+2.6%

+9.7%

+4.4%

+1.3%

+17.5%

 

 

 

Required

Discuss the relationship between net income and cash flow from operations and between cash flows from operating, investing, and financing activities for the firm over the five-year period.

3.18     INTERPRETING THE STATEMENT OF CASH FLOWS. Sirius XM Radio Inc. is a satellite radio company, formed from the merger of Sirius and XM in 2008. Exhibit 3.25 presents a statement of cash flows for Sirius XM Radio for 2006, 2007, and 2008. Sirius XM and its predecessor, Sirius, realized revenue growth of 49 percent in 2007 and 81 percent in 2008. The merger was a stock-for-stock merger.

Required

Discuss the relation between net loss and cash flow from operations and the pattern of cash flows from operating, investing, and financing activities during the three years.

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

2008                    2007                    2006

 

Net loss                                                                        $(5,313,288)       $(565,252)       $(1,104,867)

Adjustments to reconcile net loss to net cash used in

 

operating activities:

 

Depreciation and amortization

203,752

106,780

105,749

Impairment loss

4,766,190

—

10,917

Non-cash interest expense, net of amortization of premium

(6,311)

4,269

3,107

Provision for doubtful accounts

21,589

9,002

9,370

Non-cash loss from redemption of debt

98,203

—

—

Loss on disposal of assets

4,879

(428)

1,661

Loss on investments, net

28,999

—

4,445

Share-based payment expense

87,405

78,900

437,918

Deferred income taxes

2,476

2,435

2,065

Other non-cash purchase price adjustments

(67,843)

—

—

Changes in operating assets and liabilities, net of assets

 

 

 

and liabilities acquired:

 

 

 

Accounts receivable

(32,121)

(28,881)

(1,871)

Inventory

8,291

4,965

(20,246)

Prepaid expenses and other current assets

(19,953)

11,118

(42,132)

Other long-term assets

(13,338)

(729)

(39,878)

Accounts payable and accrued expenses

(65,481)

66,169

26,366

Accrued interest

23,081

(8,920)

1,239

Deferred revenue

55,778

169,905

181,003

Other long-term liabilities

64,895

1,901

3,452

Net Cash Used in Operating Activities

$  (152,797)

$(148,766)

$  (421,702)

(Continued)

 

 

 

 

 

2008

2007

2006

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

Additions to property and equipment

$  (130,551)

$ (65,264)

$ (92,674)

Sales of property and equipment

105

641

127

Purchases of restricted and other investments

(3,000)

(310)

(12,339)

Acquisition of acquired entity cash

819,521

—

—

Merger-related costs

Purchase of available-for-sale securities

(23,519)

—

(29,444)

—

— (123,500)

Sale of restricted and other investments

65,869

40,191

255,715

Net Cash Provided by (Used in) Investing Activities

$     728,425

$ (54,186)

$  27,329

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

Proceeds from exercise of warrants and stock options

 

 

 

and from share/borrow arrangement

$             471

$   4,097

$   25,787

Long-term borrowings, net of related costs

Payment of premiums on redemption of debt and  payments

531,743

244,879

—

to minority interest holder

(20,172)

—

—

Repayment of long-term borrowings

(1,146,044)

(625)

—

Net Cash (Used in) Provided by Financing Activities

$  (634,002)

$248,351

$  25,787

Net (Decrease) Increase in Cash and Cash Equivalents

$     (58,374)

$ 45,399

$(368,586)

Cash and cash equivalents at beginning of period

438,820

393,421

762,007

Cash and Cash Equivalents at End of Period

$     380,446

$438,820

$ 393,421

 

Answers

Maurice Tutor
(5)
Status NEW Posted 19 Jan 2018 09:01 PM My Price 10.00

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