1 answer

The following data below relate to the statement of cash flows accounts of Amazon and Wal-Mart...

Question:

The following data below relate to the statement of cash flows accounts of Amazon and Wal-Mart Stores, Inc. (All amounts in millions)

Amazon

Wal-Mart

Net cash provided by operating activities

$3,903

$24,255

Cash spent for capital assets

$1,811

$13,510

Cash dividends

$0

$5,048

Instructions

  1. Based on the information contained in these data, compute free cash flow for each company.
  2. What conclusions concerning the management of cash can be drawn from these data?

Answers

a. Statement showing free cash flow of the company

particulars Amazon Wal Mart
Net cash provided by operating activities $ 3903 24255
- Capital expenditure $1811 13510
Free cash flow 2902 10745

b. Conclusion : Both the companies are spending almost 50% of the cash flow from operating activities in capital expenditure which is good for the future development. Also, it can be said that Amazon is retaining its entire cash in contrast with Wal Mart which is paying some portion to its shareholders

.

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