Refer to the statement of cash flows in CVS Corporation's 2011 annual report, which you can find using either the "Investor Relations" portion of its website (do a web search for CVS investor relations) or by going to www.sec.gov and, under the "Filings" tab, clicking on "Search for company filings."
1. Does CVS use the indirect method of reporting cash flows from operating activities? Other than net earnings, what are the most important factors affecting the company's cash flows from operating activities? Explain the trend of each of these factors.
2. Based on the cash flows from investing activities, in 2010 and 2011, would you say that CVS is a contracting or an expanding company? Explain.
3. Has CVS used external financing during 2010 and 2011? If so, where did it come from?