Procter & Gamble Co., is an American multinational corporation that manufactures a wide range of consumer goods, such as laundry and homecare (Ariel, Mr Clean), feminine protection (Always), healthcare, food and beverages, beauty care (Head & Shoulders) and baby care (Pampers).8 The following consolidated statement of cash flows are found in its 2009, 2010 and 2011 annual reports.

From the consolidated financial statements, the following additional data was collected:

Required
Step one: Understanding
1. What is unusual about this statement as regards its presentation of cash and cash equivalents at the beginning and the end of year?
2. Which method is used for computing the cash flow from operating activities?
3. Why are the operating cash flows larger than the net income each year?
Step two: Analyzing
Analyze, in light of all the information provided in the text, the statement of cash flows over the period.

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Consolidated statements of cash flows Years ended June 30 | 2011 | 2010 | 2009 | 2008 | 2007 Amounts in Millions of US dollars Cash and cash equivalents, beginning of year Operating activities Net earnings Depreciation and amortization Share-based compensation expense Deferred income taxes Gain on sale of businesses Change in accounts receivable Change in inventories Change in accounts payable, accrued and other liabilites Change in other operating assets and liabilities Other Total operating activities Investing activities Capital expenditures Proceeds from asset sales Acquisitions, net of cash acquired Change in investments Total investing activities Financing activities Divdends to shareholders Change in short-term debt Additions to long-term debt Reductions of long-term debt Treasury purchases Impact of stock options and other Total financing activities Effect of exchange rate changes on cash and cash equivalents16322(284 Change in cash and cash equivalents Cash and cash equivalents, end of year 2,879 4,783,3135,354 6,693 11,797 12,73613,436 12,075 10,340 2,838 3,1083,082 3,166 3,130 668 253 (203) (2,670) (2,377)(284153) (426)14)4143(729) 721 1,050(389) 297 (278) 1,190)(30(751270151) 719 13,231 16,072 14,919 15,008 13,410 414 128 453 36 516 596 1214 (501) 86 358 2446 (742) 196 16 30 (127) (3,306) 3067(3,238)(3,046(2,945) 281 225 3,068 1,087 928 (474) (425) (368) (381) (492) 673 73 173) 166 (5,767) (5,458) (5,044) (4,655 4,209) 151 1,798) (2,420) 2,6509,006 1,536 3,80 4,926 7,088 4,758 (206) (8,546) 2,587,747) (17,929) (7,039) 6,004) 6,370) 10,047 (5,578) 681 1,867 1,499 1,302 721 344187 (111)(1,902) 1468 2041) (1.339 2,7682,8794,78 3,3135,354 Supplemental disclosure Cash payments for 2011 2010 2009 20082007 806 1,184 1,226 1,373 ,330 2,992 4,175 3,248 3,499 4,116 Interest Income taxes Assets acquired through noncash capital leases Divestiture of coffee business in exchange for shares of P&G stock Amounts in Millions of US dollars Sales Net earnings Current liabilities Total liabilities 13 20 13 2,466 20112010 2009 2008 2007 82,559 78,938 79,02981,748 74,832 11,797 12,73613,436 12,075 10,340 27,293 24,282 30,9030,958 30,717 70,353 66,733 71,734 74,498 71,254