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Question: The Coca-Cola Company (Coca-Cola) manufactures

The Coca-Cola Company (Coca-Cola) manufactures and markets a variety of beverages. Exhibit 3.16 presents a statement of cash flows for Coca-Cola for three years. Exhibit 3.16:
The Coca-Cola Company (Coca-Cola) manufactures and markets a variety of beverages. Exhibit 3.16 presents a statement of cash flows for Coca-Cola for three years.

Exhibit 3.16:

REQUIRED:
Discuss the relations between net income and cash flow from operations and among cash flows from operating, investing, and financing activities for the firm over the three-year period. Identify characteristics of Coca-Cola’s cash flows that you would expect for a mature company.


The Coca-Cola Company (Coca-Cola) manufactures and markets a variety of beverages. Exhibit 3.16 presents a statement of cash flows for Coca-Cola for three years.

Exhibit 3.16:

REQUIRED:
Discuss the relations between net income and cash flow from operations and among cash flows from operating, investing, and financing activities for the firm over the three-year period. Identify characteristics of Coca-Cola’s cash flows that you would expect for a mature company.

REQUIRED: Discuss the relations between net income and cash flow from operations and among cash flows from operating, investing, and financing activities for the firm over the three-year period. Identify characteristics of Coca-Cola’s cash flows that you would expect for a mature company.





Transcribed Image Text:

Exhibit 3.16 The Coca-Cola Company Statement of Cash Flows (amounts in millions) (Problem 3.18) Year Ended December 31, Year 3 Year 2 Year 1 OPERATING ACTIVITIES Net income $ 5,807 $ 5,981 $ 5,080 Depreciation and amortization Stock-based compensation expense 1,228 1,163 938 266 313 324 (360) 1,128 (42) (130) Deferred income taxes 109 (35) Equity income or loss, net of dividends Foreign currency adjustments Gains on sales of assets, including bottling interests Other operating charges (452) 124 52 (244) (303) 209 166 159 Other items 153 99 233 Net change in operating assets and liabilities Net Cash Provided by Operating Activities (688) 6. (615) $ 7,571 $ 7,150 $ 5,957 INVESTING ACTIVITIES Acquisitions and investments, principally beverage and bottling companies and trademarks $ (759) (240) $(5,653) $ (901) Purchases of other investments (99) (82) Proceeds from disposals of bottling companies and other investments 479 448 640 Purchases of property, plant, and equipment (1,968) (1,648) (1,407) Exhibit 3.16 (Continued) Proceeds from disposals of property, plant, and equipment Other investing activities Net Cash Used in Investing Activities 129 239 112 (62) (4) $(2,363) (6) $(6,719) $(1,700) FINANCING ACTIVITIES Issuances of debt $ 4,337 $ 9,979 (5,638) 1,619 $ 617 Payments of debt (4,308) (2,021) Issuances of stock 586 148 Purchases of stock for treasury (1,079) (1,838) (2,416) (3,149) $ 973 $ 249 Dividends (3,521) (2,911) $(3,985) $ (615) $(6,583) Net Cash Provided by (Used in) Financing Activities Effect of exchange rate changes on cash and cash equivalents 65 CASH AND CASH EQUIVALENTS $ 608 $ 1,653 Net Increase (Decrease) During the Year Balance at beginning of year $(2,261) 4,093 2,440 4,701 Balance at End of Year $ 4,701 $ 4,093 $ 2,440


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2.99

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