An income statement is a financial statement prepared on an accrual basis. A statement of cash flows is a financial statement prepared on a cash basis. It shows how and where the company received cash and spent cash. On a statement of cash flows, outflows of cash are usually shown in parenthesis. Inflows of cash are shown as positive amounts. These inflows and outflows of cash are organized into three categories—operating activities, investing activities, and financing activities. Buying and selling plant assets are classified as investing activities,

Instructions:

1. Go to the statement of cash flows for Costco on Appendix B page B-9. Find the heading “Cash flows from investing activities.’ Find the largest outflow of cash from investing activities for 2006. List the item and the amount of the outflow.
2. Find the largest inflow of cash from investing activities for 2006. List the item and the amount of the inflow.
3. How much cash has been used to purchase property and equipment over the last three years?
4. How much cash has been received from the sale of property and equipment over the last three years?

Data from Appendix B page B-9

Transcribed Image Text:

COSTCO WHOLESALE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) Fiscal Year Ended September 3, 2006 August 28, 2005 August 29, 2004 CASH FLOWS FROM OPERATING ACTIVITIES Net income.. $ 1,103,215 $ 1,063,092 $ 882,393 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Other 515,285 481,838 440,721 (5,888) (11,186) 74 Accretion of discount on zero coupon notes 4,828 11,855 18,421 Stock-based compensation 107,397 67,937 36,508 Undistributed equity earnings in joint ventures (28,180) (26,459) (23,517) Net loss/(gain) on sale of property and equipment and other 5,867 5,139 (9,122) Provision for impaired assets 3,893 Change in deferred income taxes (38,311) (64,690) 32,496 Excess tax benefit from exercise of stock options (31,296) Change in receivables, other current assets, deferred income, accrued and other current liabilities 416,112 78,118 762,739 Increase in merchandise inventories Increase in accounts payable. Total adjustments (500,602) 278,863 (315,793) 482,217 (256,438) 211,990 724,075 712,869 1,213,872 Net cash provided by operating activities 1,827,290 1,775,961 2,096,265 CASH FLOWS FROM INVESTING ACTIVITIES Additions to property and equipment... (1.212,567) Proceeds from the sale of property and equipment Investment in unconsolidated joint venture 15,740 (15,000) (995,431) 19,432 Purchase of minority interests. Purchases of short-term investments (2,598,355) Maturities of short-term investments Sales of short-term investments 2,424,503 263,288 (15,000) (3,961) (3,741,429) 2,401,248 267,640 (705,620) 55,400 (95,153) (387,223) 83,278