The financial statements of adidas (DEU) and Puma (DEU) are presented in Appendices B and C, respectively.

The complete annual reports, including the notes to the financial statements, are available online.

Instructions Use the companies’ financial information to answer the following questions.

(a) What method of computing net cash provided by operating activities does adidas use? What method does Puma use? What were the amounts of cash provided by operating activities reported by adidas and Puma in 2012?

(b) What was the most significant item reported by adidas and Puma in 2012 in their investing activities sections? What is the most significant item reported by adidas and Puma in 2012 in their financing activities sections?

(c) What were these two companies’ trends in net cash provided by operating activities over the period 2010 to 2012?

(d) Where is “depreciation and amortization” reported by adidas and Puma in their statements of cash flows? What is the amount and why does it appear in that section of the statement of cash flows?

(e) Based on the information contained in adidas’s and Puma’s financial statements, compute the following 2012 ratios for each company. These ratios require the use of statement of cash flows data. 

(1) Current cash debt coverage.

(2) Cash debt coverage.

(f) What conclusions concerning the management of cash can be drawn from the ratios computed in (e)?