Discussion Question 1

Using the table below, explain the difference between net income and cash flow from operating activities for Techno in 2009 and analyze their cash flows for 2008 and 2009.

(in thousands)
2009
2008
Net income
$ 316,354
$ 242,329
Noncash charges (credits) to income

Depreciation and amortization
68,156
62,591
Deferred taxes
15,394
22,814

$ 399,904
$ 327,734
Cash Provided (Used) by Operating Assets and Liabilities:

Receivables
(288,174)
(49,704)
Inventories
(159,419)
(145,554)
Other current assets
(1,470)
3,832
Accounts payable, accrued liabilities
73,684
41,079
Total Cash Provided by Operations
$ 24,525
$ 177,387
Investment activities

Additions to plant and equipment
(94,1760)
(93,136)
Other investment activities
14,408
(34,771)
Net investment activities
($ 79,768)
($ 127,907)
Financing activities

Purchases of treasury stock
(45,854)
(39,267)
Dividends paid
(49,290)
(22,523)
Net changes in short-term borrowing
125,248
45,067
Additions to long-term borrowings
135,249
4,610
Repayments of long-term borrowings

(250,564)
Net financing activities
$ 165,353
($ 262,677)
Increase (decrease) in cash
$ 110,110
($ 213,197)
Beginning cash balance
78,114
291,311
Ending cash balance
$ 188,224
$ 78,114

Discussion Question 2
Referencing this week’s readings and lecture, describe the following terms as they relate to the statement of cash flows: cash, operating activities, investing activities, and financing activities. What can creditors, investors, and other users glean from an analysis of the statement of cash flows?