This activity will require two teams to retrieve cash flow statement information from the Internet. One team is to obtain the most recent year’s statement of cash flows for Johnson & Johnson, and the other team the most recent year’s statement of cash flows for AMR Corp.

The statement of cash flows is included as part of the annual report information that is a required disclosure to the Securities and Exchange Commission (SEC). The SEC, in turn, provides this information online through its EDGAR service. EDGAR (Electronic Data Gathering, Analysis, and Retrieval) is the electronic archive of financial statements filed with the Securities and Exchange Commission (SEC). SEC documents can be retrieved using the EdgarScan service from PricewaterhouseCoopers at edgarscan.pwcglobal. com.

To obtain annual report information, type in a company name in the appropriate space. EdgarScan will list the reports available to you for the company you’ve selected. Select the most recent annual report filing, identified as a 10-K or 10-K405. EdgarScan provides an outline of the report, including the separate financial statements. You can double-click the income statement and balance sheet for the selected company into an ExcelTM spreadsheet for further analysis.

As a group, compare the two statements of cash flows.

a. How are Johnson & Johnson and AMR similar or different regarding cash flows?

b. Compute and compare the free cash flow for each company, assuming additions to property, plant, and equipment replace current capacity.