Response to the following problem:
Use the 2008 statement of cash flow for the CoCa-Colacompany to answer the following questions:
1. compute Coca-Cola's "Net cash provided by operating after reinvestment." This amount is computed by subtracting "Net cash from investing activities" from " Net cash from operating activities." Interpret the results of the calculation for Coca-Cola for the period 2006-2008
2. In its operating activities section, Coca-Cola subtracts gains on sales of assets in computing net cash from operating activities. Why are these gains subtracted?
3. Think of the dealings that Coca-Cola has its shareholders. The shareholders give money to te company bay purchasing new shares of stock. For the three-year period 2006-2008, did Coca-Cola receive more cash from its shareholders than it paid back to them, or did it pay more cash to its shareholders than it received? Show your caculations.
4. Look carefully at the statement of cash flows. Did the U.S dollar get stronger or weaker during the three-year period 2006-2008?
The Coca-Cola Company and Subsidiaries Consolidated Statement of Cah Flows
For the Years Ended Deceber 31, 2006, 2007, 2008 (in millions)
2008 2007 2006
Operating activities
Net income ............................................................................. $5,807 $5,981 $5,080
Depreciation and amortization............................................ 1,228 1,163 938
Stock-based compensation expense................................... 266 313 324
Deferred income taxes............................................................ (360) 109 (35)
Equity income or loss, net of dividends............................... 1,128 (452) 14
Foreign currency adjustments.............................................. (42) 9 52
Gains on sales of assets, including bottling interest......... (130) (244) (303)
Other operating changes....................................................... 209 166 159
Other items.............................................................................. 153 99 233
Net change in operating assets and liabilities..................... (688) 6 (615)
Net cash from oerating activities........................................... $ 7,571 $ 7,150 $ 5,975
Investing activities
Acquisition and investment, principally trademark
and bottling companies....................................................... $ (759) $ (5, 653) $ (901)
Purchases of other investment............................................ (240) (99) (82)
Proceeds from disposals of investments and other assets 479 448 640
Purchases of property , plant, and equipment.................... (1,968) (1,648) (1,407)
Proceeds from disposals , plant and equipment.................. 129 239 112
Other investing activities..................... (4) (6) (62)
Net cash from investing activities.......................................... $(2,363) $ (6,719) $(1,700)
Financing activities
Issuances of debt................................................................. $4,337 $9,979 $617
Payments of debt................................................................ (4,308) (5,638) (2,021)
Issuances of stock................................................................ 586 1,619 148
Purchases of stock for treasury........................................ (1,079) (1,838) (2,416)
Dividends............................................................................. (3,521) (3,149) (2,911)
Net cash from financing activities........................................ $(3,985) $ 973 $(6,583)
Effect of exchange rate changes on cash and cash
equivalents............................................................................ $ (615) $249 $65
Cash and cash equivalent: ...................................................
Net increase during the year............................................. $ 608 $ 1,653 $(2,261)
Balance of beginning of year............................................ 4,093 2,440 4,701
Balabce of the end of year.............................................. $ 4,701 $4,093 $2,440