Review the existing literature to critically examine the relative information content of the
income statement and the statement of cash flows. Why do investors find both income
statement and statement of cash flows useful?
Download the annual financial reports of BHP Ltd, Santos Ltd, and Funtastic Ltd for the year
2019, 2018 and 2017. Examine the consolidated Cash Flow Statements for each companies
across three years. Answer the following questions about each of the three cash-flow
1. For each companies [except mentioned otherwise as in c), g) and i) below], across three
years on the Statement of Cash Flows discuss:
a) What are the major sources of cash for each firm? What are the major uses of
cash for each firm?
b) What was the trend in cash flow from (continuing) operations for each firm?
c) Compare and contrast the cash flow from operations with the net profit after tax
in income statement. Explain in detail the major reasons for the difference
between these two figures. (Answer this question using only the Cash flow
statement for BHP Limited).
d) Was the firm able to generate enough cash from operations to pay for all of its
e) Did the cash flow from operations cover the dividend payment made by the firm
f) If the firm has generated excess cash from operations, how did the firm invest
the excess cash? If not, what were the sources of cash the firm used to pay for
the capital expenditures and/or dividends?
g) Did the firm use the working capital (current asset and current liability) accounts
other than cash and cash equivalents as sources of cash, or uses of cash? (Answer
this question using only the Cash flow statement for BHP Limited).
h) What other major items affected cash flows for each firm?
i) What was the trend in capital expenditures for each firm?
j) What was the trend in dividends (if any) for each firm?
k) What was the trend in net borrowing (proceeds from borrowing less payments
of short- and long-term debt) for each firm?
l) What was the trend in working capital accounts? (Answer this question using
only the Cash flow statement for BHP Limited).
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