week 8 exercises 495493

JWCL165_c13_612-673.qxd 8/13/09 11:15 AM Page 612 Chapter 13 Statement of Cash Flows STUDY OBJECTIVES The Navigator ? Scan Study Objectives ¦ After studying this chapter, you should be able to: Read Feature Story ¦ 1 Indicate the usefulness of the statement Read Preview ¦ of cash flows. Read text and answer Do it! 2 Distinguish among operating, investing, p. 617 ¦ p. 625 ¦ p. 628 ¦ p. 632 ¦ and financing activities. Work Comprehensive Do it! p. 634 ¦ 3 Prepare a statement of cash flows using the indirect method. Review Summary of Study Objectives ¦ 4 Analyze the statement of cash flows. Work Comprehensive Do it! p. 648 ¦ The Navigator ? Answer Self-Study Questions ¦ Complete Assignments ¦ Feature Story GOT CASH? In today’s environment, companies must be ready to respond to changes quickly in order to survive and thrive. They need to produce new products and expand into new markets continually. To do this takes cash—lots and lots of cash. Keeping lots of cash available is a real challenge for a young company. It requires careful cash management and attention to cash flow. One company that managed cash successfully in its early years was Microsoft (www.microsoft.com). During those years the company paid much of its payroll with stock options (rights to purchase company stock in the future at a given price) instead of cash. This strategy conserved cash, and turned more than a thousand of its employees into millionaires during the company’s first 20 years of business. In recent years Microsoft has had a different kind of cash problem. Now that it has reached a more “mature” stage in life, it generates so much cash— roughly $1 billion per month—that it cannot always figure out what to do with it. By 2004 Microsoft had accumulated $60 billion. 612JWCL165_c13_612-673.qxd 8/13/09 11:15 AM Page 613 The company said it was accumu- lating cash to invest in new oppor- tunities, buy other companies, and pay off pending lawsuits. But for years, the…