Review the following real-world Hewlett Packard Statement of Cash flows and address the two questions below:
|
Cash flow from operating activities
|
In millions
|
In millions
|
|
For the year ended 2012
|
For the year ended 2011
|
|
Net (loss) earnings
|
$(12,650)
|
$7,074
|
|
Depreciation and amortization
|
5,095
|
4,984
|
|
Impairment of goodwill and purchased intangible assets
|
18,035
|
885
|
|
Stock-based compensation expense
|
635
|
685
|
|
Provision for doubtful accounts
|
142
|
81
|
|
Provision for inventory
|
277
|
217
|
|
Restructuring charges
|
2,266
|
645
|
|
Deferred taxes on earnings
|
(711)
|
166
|
|
Excess tax benefit from stock-based competition
|
(12)
|
(163)
|
|
Other, net
|
265
|
(46)
|
|
Accounts and financing receivables
|
1,269
|
(227)
|
|
Inventory
|
890
|
(1,252)
|
|
Accounts payable
|
(1,414)
|
275
|
|
Taxes on earnings
|
(320)
|
610
|
|
Restructuring
|
(840)
|
(1,002)
|
|
Other assets and liabilities
|
(2,356)
|
(293)
|
|
Net cash provided by operating activities
|
10,571
|
12,639
|
|
Cash flows from investing activities:
|
|
|
|
Investment in property, plant, and equipment
|
(3,706)
|
(4,539)
|
|
Proceeds from sale of property, plant, and equipment
|
617
|
999
|
|
Purchases of available-for-sale securities and other investments
|
(972)
|
(96)
|
|
Maturities and sales of available-for-sale securities and other investment
|
662
|
68
|
|
Payments in connection with business acquisitions, net of cash acquired
|
(141)
|
(10,480)
|
|
Proceeds from business divestiture, net
|
87
|
89
|
|
Net cash used in investing activities
|
(3,453)
|
(13,959)
|
|
Cash flow from financing activities:
|
|
|
|
(Payments) issuance of commercial paper and notes payable, net
|
(2,775)
|
(1,270)
|
|
Issuance of debt
|
5,154
|
11,942
|
|
Payment of debt
|
(4,333)
|
(2,336)
|
|
Issuance of common stock under employee stock plans
|
716
|
896
|
|
Repurchase of common stock
|
(1,619)
|
(10,117)
|
|
Excess tax benefit from stock-based compensation
|
12
|
163
|
|
Cash dividends paid
|
(1,015)
|
(844)
|
|
Net cash used in financing activities
|
(3,860)
|
(1,566)
|
|
Increase (decrease) in cash and cash equivalents
|
3,258
|
(2,886)
|
|
Cash and cash equivalents at beginning of period
|
8,043
|
10,929
|
|
Cash and cash equivalents at end of period
|
$11,301
|
$8,043
|
Required:
1) Calculate the percentage increase or decrease in cash for the total line of the operating, investing, and financing sections bolded above and explain the major reasons for the increase or decrease for each of these sections.
2) Calculate the free cash flow for 2012 and explain the meaning of this ratio.