Overview
Review Exhibit 7.2 and identify the first section of Wal-Mart’s cash flow statement— cash from operations. This section represents how much cash a company generated (or lost) during the course of operations during the specified period.
| Consolidated Statements of Income | ||||||
| WAL-MART | ||||||
| (Amounts in millions) | ||||||
| Fiscal Year Ended January 31, | 2006 | 2005 | 2004 | |||
| Cash flows from operating activities | ||||||
| Income from continuing operations | $ 11,231 | $ 10,267 | $ 8,861 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 4,717 | 4,264 | 3,852 | |||
| Deferred income taxes | (129) | 263 | 177 | |||
| Other operating activities | 620 | 378 | 173 | |||
| Changes in certain assets and liabilities, net of effects of acquisitions: | ||||||
| Decrease (increase) in accounts receivable | (456) | (304) | 373 | |||
| Increase in inventories | (1,733) | (2,494) | (1,973) | |||
| Increase in accounts payable | 2,390 | 1,694 | 2,587 | |||
| Increase in accrued liabilities | 993 | 976 | 1,896 | |||
| Net cash provided by operating activities of continuing operations | 17,633 | 15,044 | 15,946 | |||
| Net cash provided by operating activities of discontinued operation | — | — | 50 | |||
| Net cash provided by operating activities | 17,633 | 15,044 | 15.996 | |||
| Cash flows from investing activities | ||||||
| Payments for property and equipment | (14,563) | (12,893) | (10,308) | |||
| Investment in international operations, net of cash acquired | (601) | (315) | (38) | |||
| Proceeds fromnhe disposal of fixed assets | 1,049 | 953 | 481 | |||
| Proceeds from the sale of McLane | — | — | 1,500 | |||
| Other investing activities | (68) | (96) | 78 | |||
| Net cash used in investing activities of continuing operations | (14,183) | (12,351) | (8,287) | |||
| Net cash used in investing activities of discontinued operation | — | — | (25) | |||
| Net cash used in investing activities | (14,183) | (12,351) | (8,312) | |||
| Cash flows from financing activities | ||||||
| Increase (decrease) in commercial paper | (704) | 544 | 688 | |||
| Proceeds from issuance of long-term debt | 7,691 | 5,832 | 4,099 | |||
| Purchase of Company stock | (3,580) | (4,549) | (5,046) | |||
| Dividends paid | (2,511) | (2,214) | (1,569) | |||
| Payment of long-term debt | (2,724) | (2,131) | (3,541) | |||
| Payment of capital lease obligations | (245) | (204) | (305) | |||
| Other financing activities | (349) | 113 | 111 | |||
| Net cash used in financing activities | (2,422) | (2,609) | (5,563) | |||
| Effect of exchange rate changes on cash | (102) | 205 | 320 | |||
| Net increase in cash and cash equivalents | 926 | 289 | 2,441 | |||
| Cash and cash equivalents at beginning of year | 5,488 | 5,199 | 2,758 | |||
| Cash and cash equivalents at end of year | $ 6,414 | $ 5,488 | $ 5,199 | |||
| Supplemental disclosure of cash flow Information | ||||||
| Income tax paid | $ 5,962 | $ 5,593 | $ 4,538 | |||
| Interest paid | 1,390 | 1,163 | 1,024 | |||
| Capital lease obligations incurred | 286 | 377 | 252 | |||
Source: Used with permission of Wal-Mart Inc.
In the lemonade stand example, this refers to how much cash was generated from selling lemonade, minus costs of buying new inventories, paying salaries, and any other income or expense that is involved in the direct operations of the business.
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