Question

	2011	2010	Difference	Operating	Investing	Financing
ASSETS:
Current Assets
Cash and equivalents	$ 2,291.1	$ 2,133.9	157.2	0	0	0
Short-term investments	1,164.2	642.2	522	-522
Account receivable	2,883.9	2,795.3	88.6	-88.6
Inventory	2,357.0	2,438.4	-81.4	81.4
Prepaid expenses and other assets	765.6	602.3	163.3	-163.3
Deferred income taxes, net	272.4	227.2	45.2	-45.2
Total Current Assets	$ 9,734.0	$ 8,839.3	894.7
Property and equipment, gross	4,255.7	4,103.0	152.7		-152.7
Accumulated depreciation	(2,221.9)	(2,298.0)	76.1	76.1
Property and equipment, net	$ 1,957.7	$ 1,891.1	66.6
Identifiable intangible assets	467.4	743.1	-275.7		275.7
Good will	193.5	448.8	255.3		255.3
Deferred income taxes and other assets	897.0	520.4	376.6	-376.6
Total Assets	$13,249.6	$12,442.7	806.9
				0
Liabilities and Stockholders’ Equity				0
Current Liability :				0
Current portion of long-term debt	$       32.0	$          6.3	25.7	25.7
Note Payable	342.9	177.7	165.2	165.2
Account Payable	1,031.9	1,287.6	-255.7	-255.7
Accrued liabilities	1,783.9	1,761.9	22	22
Income taxes payable	86.3	88.0	-1.7	-1.7
Total Current Liabilities	$   3,277.0	$ 3,321.5	-44.5
Long term debt	437.2	441.1	-3.9			-3.9
Deferred taxes and other long-term liabilities	842.0	854.5	-12.5	-12.5
Total Liabilities	$ 4,556.2	$ 4,617.1	-60.9
Redeemable preferred stock	$         0.3	$        0.3	0	0
Common Shareholders’ Equity				0
Common stock	2.8	2.8	0	0	0	0
Capital in excess of stated value	$ 2,781.4	$ 2,497.8	283.6
Retained earnings	5,451.4	5,073.3	378.1	378.1
Accumulated other comprehensive income	367.5	251.4	116.1	0	0	0
Total Common Shareholders’ Equity	$ 8,693.1	$ 7,825.3	867.8
Total Liabilities and Shareholders’ Equity	$13,249.6	$12,442.7	806.9

I need a paragraph analysis/summaryhe results of this income statement using the indirect method.

Answer 1

Analysis: In Net Cash Flow from OPERATING ACTIVITIES, we take all the amounts form whch form part of the operations and since we are solving it using Indirect Method, we take the following into consideration. The differences in current assets and liabilities are taken so that we can arrive at the exact cash from operations, the trade receivables have increased which means we have given more advance to the debtors and hence the cash had flown out and hence we have taken a negative balance and vice versa.

Particulars	Amount	Notes
CASH FLOW FROM OPERATING ACTIVITIES:
Net profit before tax and extraordinary items	378.1
Adjustments:
Deferred taxes and other LT assets/liabilities	-389.1
Depreciation	76.1
Operating profit before working capital changes	65.1
Adjustments:
Trade and other receivables	-251.9	Note 1
Inventories	81.4
Trade Payables and other current liabilities	-42.8	Note 2
Cash from operations	-148.2
Direct taxes	-1.7
Cash before extraordinary items	-149.9
Deferred Revenue	0
Net Cash Flow from Opertating Activities (A)	-149.9

Note 1:	Trade and other receivables	2011	2010	Difference
	Account receivable	2,883.90	2,795.30	-88.60
	Prepaid expenses and other assets	765.6	602.3	-163.30
		3649.5	3397.6	-251.9
Note 2:	Trade Payables and other current liabilities
	Current portion of long-term debt	32	6.3	25.7
	Note Payable	342.9	177.7	165.2
	Account Payable	1031.9	1287.6	-255.7
	Accrued liabilities	1783.9	1761.9	22
		3190.7	3233.5	-42.8

In INVESTING ACTIVITIES, we consider all those amounts which were used for investing in other assets or investments, so here we take interests/dividend received into consideration.

CASH FLOW FROM INVESTMENT ACTIVITIES:
Purchase of Fixed Assets	152.7
Proceeds from sale of fixed assets	531
Net Cash Flow from Investment Activities (B)	378.3

In FINANCING ACTIVITIES, we consider the amounts which the others investin our organisation and consider all the below amounts.

CASH FLOW FROM FINANCIAL ACTIVITIES:
Proceeds from issue of Share Capital	283.6
Repayment of LT borrowings	-3.9
Net Cash Flow from Financing Activities ( C)	279.7