Below is a summarized cash flow statement of Thomson Reuters Corporation, the international provider of information. The amounts exclude interest paid and received and dividends paid during 2010 and 2009. IFRS allows companies to choose to include interest and dividends paid an operating or financing cash flow and interest received as either operating or investing cash flows.

Required:

a. Recalculate each category of Thomson Reuters’ 2009 and 2010 cash flows under the following assumptions:

i. Treat dividends, interest received, and interest paid as operating cash flows;

ii. Treat dividends and interest paid as financing cash flows, and interest received as an investing cash flow;

iii. Treat dividends as a financing cash flow and interest paid and received as operating cash flows (this is what Thomson Reuters does).

b. Interpret the results you obtained in part (a).

c. What is the economic impact of the different treatments?

d. Which treatment do you think is most useful to stakeholders? Explain your answer.

e. Why do you think Thomson Reuters would choose the approach it used?

Thomson Reuters Corporation Summarized Cash Flow Statements For the years ended December 31, (millions) 2010 2009 Net cash provided by operations $3,041 $3,083 Net cash used in investing activities (1,675) (1,365) Net cash used in financing activities (318) (144) Interest paid 393 425 Interest received 7 8 Dividends paid 901 L06