Following is the statement of cash flows for Wal-Mart Stores, Inc,

Required

a. Why does Wal-Mart add back depreciation to compute net cash flows from operating activities?

b. Explain why the increase in receivables and inventories is reported as a cash outflow. Why do accounts payable and accrued liabilities provide a source of cash?

c. Wal-Mart reports that it invested $ 12,898 million in property and equipment. Is this an appropriate type of expenditure for Wal-Mart to make? What relation should expenditures for PPE assets have with depreciation expense?

d. Wal-Mart indicates that it paid \(\$ 7,600\) million to repurchase its common stock in fiscal 2013 and, in addition, paid dividends of $ 5,361 million. Thus, Wal-Mart paid $12,961 million of cash to its stockholders during the year. How do we evaluate that use of cash relative to other possible uses for Wal-Mart's cash?

e. Provide an overall assessment of Wal-Mart's cash flows for 2013. In the analysis, consider the sources and uses of cash.

Transcribed Image Text:

WAL-MART STORES, INC. Statement of Cash Flows For Year Ended January 31, 2013 ($ millions) Cash flows from operating activities Income from continuing operations .... Adjustments to reconcile income from continuing operations to net cash provided by operating activities: Depreciation and amortization. Deferred income taxes.... Other operating activities. Changes in certain assets and liabilities, net of effects of acquisitions: Receivables, net Inventories..... Accounts payable. Accrued liabilities... Accrued income taxes Net cash provided by operating activities.. Cash flows from investing activities Payments for property and equipment.... Proceeds from the disposal of property and equipment Investments and business acquisitions, net of cash acquired.. Other investing activities...... Net cash used in investing activities 17,756 8,501 (614) (2,759) 1,061 271 981 (133) 527 25,591 (12,898) 532 (316) 71 (12,611)