公司理财（英文版）1250

CorporateFinance

ThirteenthEdition

StephenA.Ross/RandolphW.Westerfield/JeffreyF.Jaffe/BradfordD.JordanChapter1IntroductiontoCorporateFinance©McGrawHillLLC.Allrightsreserved.NoreproductionordistributionwithoutthepriorwrittenconsentofMcGrawHillLLC.KeyConceptsandSkillsKnowthebasictypesoffinancialmanagementdecisionsandtheroleofthefinancialmanager.Knowthefinancialimplicationsofthevariousformsofbusinessorganization.Knowthegoalofthefinancialmanager.Understandtheconflictsofinterestthatcanarisebetweenownersandmanagers.Understandthevariousregulationsthatfirmsface.2ChapterOutline1.1WhatisCorporateFinance?1.2TheCorporateFirm1.3TheImportanceofCashFlows1.4TheGoalofFinancialManagement1.5TheAgencyProblemandControloftheCorporation1.6Regulation31.1WhatIsCorporateFinance?Corporatefinanceaddressesthefollowingthreequestions:Inwhatlong-livedassetsshouldthefirminvest?Howcanthefirmraisecashforrequiredcapitalexpenditures?Howshouldshort-termoperatingcashflowsbemanaged?4TheBalanceSheetModeloftheFirmTotalValueofAssets:CurrentAssets.FixedAssets.Tangible.Intangible.TotalValueoftheFirmtoInvestors:CurrentLiabilities.Long-TermDebt.Shareholders’Equity.5TheCapitalBudgetingDecisionCurrentAssets.FixedAssets.Tangible.Intangible.Inwhatlong-termassetsshouldthefirminvest?CurrentLiabilities.Long-TermDebt.Shareholders’Equity.6TheCapitalStructureDecisionCurrentAssets.FixedAssets.Tangible.Intangible.Howshouldthefirmraisefundsfortheselectedinvestments?CurrentLiabilities.Long-TermDebt.Shareholders’Equity.7Short-TermAssetManagementAccessthetextalternativeforslideimages8TheFinancialManagerThefinancialmanager’sprimarygoalistoincreasethevalueofthefirmby:Selectingvalue-creatingprojects.Makingsmartfinancingdecisions.9HypotheticalOrganizationChartAccessthetextalternativeforslideimages101.2TheCorporateFirmThecorporateformofbusinessisthestandardmethodforsolvingtheproblemsencounteredinraisinglargeamountsofcash.However,businessescantakeotherforms.11FormsofBusinessOrganizationTheSoleProprietorship.ThePartnership.GeneralPartnership.LimitedPartnership.TheCorporation.12AComparisonofCorporationsandPartnershipsCorporationPartnershipLiquiditySharescanbeeasilyexchangedSubjecttosubstantialrestrictionsVotingrightsUsuallyeachsharegetsonevoteGeneralpartnerisincharge;limitedpartnersmayhavesomevotingrightsTaxationDoublePartnerspaypersonaltaxesonpartnershipprofitsReinvestmentanddividendpayoutBroadlatitudeAllnetcashflowisdistributedtopartnersLiabilityLimitedliabilityGeneralpartnersmayhaveunlimitedliability;limitedpartnersenjoylimitedliabilityContinuityPerpetuallifeLimitedlife131.3TheImportanceofCashFlowsAccessthetextalternativeforslideimages141.4TheGoalofFinancialManagementWhatisthecorrectgoal?Maximizeprofit?Minimizecosts?Maximizemarketshare?Maximizeshareholderwealth?151.5TheAgencyProblemandControloftheCorporationAgencyrelationship.Principalhiresanagenttorepresenthis/herinterest.Stockholders(principals)hiremanagers(agents)torunthecompany.Agencyproblem.Conflictofinterestbetweenprincipalandagent.16ManagementGoalsManagementgoalsmaybedifferentfromshareholdergoals.Expensiveperquisites.Survival.Independence.Increasedgrowthandsizearenotnecessarilyequivalenttoincreasedshareholderwealth.17ManagingManagersManagerialcompensation.Incentivescanbeusedtoalignmanagementandstockholderinterests.Theincentivesneedtobestructuredcarefullytomakesurethattheyachievetheirintendedgoal.Corporatecontrol.Thethreatofatakeovermayresultinbettermanagement.Otherstakeholders.181.6RegulationTheSecuritiesActof1933andtheSecuritiesExchangeActof1934.IssuanceofSecurities(1933)CreationofS

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Candreportingrequirements(1934)Sarbanes-Oxley(“S

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X”)Increasedreportingrequirementsandresponsibilityofcorporatedirectors.19QuickQuizWhatarethethreebasicquestionsfinancialmanagersmustanswer?Whatarethethreemajorformsofbusinessorganization?Whatisthegoaloffinancialmanagement?Whatareagencyproblems,andwhydotheyexistwithinacorporation?Whatmajorregulationsimpactpublicfirms?20EndofMainContent©McGrawHillLLC.Allrightsreserved.NoreproductionordistributionwithoutthepriorwrittenconsentofMcGrawHillLLC.AccessibilityContent:TextAlternativesforImages22Short-TermAssetManagement–TextAlternativeReturntoparent-slidecontainingimages.Ontheleftsideofthisgraphicaretworectangles.Oneislabeled"Currentassets,"andtheotherislabeled"Fixedassets,"whichincludestangibleandintangiblefixedassets.Ontherightsideofthegraphicarethreerectanglesstackedvertically.Thetopislabeled"Currentliabilities"andistiedtoCurrentassets.Thedifferencebetweenthosetworectanglesislabeled"Networkingcapital."Thesecondofthethreerectanglesontherightislabeled"Long-termdebt."ThethirdislabeledShareholders'equity.AcrossthebottomarelabelsofTotalValueofAssetsattheleftandTotalValueoftheFirmtoInvestorsattheright.Returntoparent-slidecontainingimages.23HypotheticalOrganizationChart–TextAlternativeReturntoparent-slidecontainingimages.OrganizationalchartstartsatthetopwithBoardofDirectorsfollowedbyChairmanoftheboardandchiefexecutiveofficer(C

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O).ThisisfollowedbyVicePresidentandchieffinancialofficer(C

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O)followedbyabranchtoTreasurerontheleftandControllerontheright.TreasurerleadstoCashManagerandCreditManager,followedbelowbyCapitalexpendituresandFinancialplanning.ControllerleadstoTaxManagerandCostAccountingManagerfollowedbyahorizontallayerofFinancialaccountingmanagerandInformationSystemsManager.Returntoparent-slidecontainingimages.241.3TheImportanceofCashFlows–TextAlternativeReturntoparent-slidecontainingimages.ThisflowchartshowsaverticalrectangleontherightcharacterizingTotalvalueofthefirmtoinvestorsinthefinancialmarkets,withtheinternallabelofFinancialMarketsandShort-termdebt,Long-termdebt,andEquityshares.AsimilarverticalrectangleontheleftcharacterizesTotalvalueoffirm’sassetswithaninternallabelofB,Firminvestsinassets,Currentassets,andFixedassets.ArrowApointsleftwardfromtherightrectangletotheleftrectangle.ThearrowislabeledA,Cashforsecuritiesissuedbythefirm.BelowarrowAisarightwardarrowC,Cashflowfromfirm’sassetsthatpointsrightwardtotheFinancialmarketsrectangleandsplitsthreeways.ThefirstisintoarrowF,DividendsanddebtpaymentsthatpointstotheFinancialmarketsrectangle.ThesecondflowisdownwardintoanarrowpointingtoabottomrectanglelabeledD,Government.ThethirdflowisupwardandloopingleftwardtothecurrentandfixedassetrectanglewiththearrowlabeledE,Retainedcashflows.Returntoparent-slidecontainingimages.25CorporateFinance

ThirteenthEdition

StephenA.Ross/RandolphW.Westerfield/JeffreyF.Jaffe/BradfordD.JordanChapter2FinancialStatementsandCashFlow©McGrawHillLLC.Allrightsreserved.NoreproductionordistributionwithoutthepriorwrittenconsentofMcGrawHillLLC.KeyConceptsandSkillsUnderstandtheinformationprovidedbyfinancialstatements.Differentiatebetweenbookandmarketvalues.Knowthedifferencebetweenaverageandmarginaltaxrates.Knowthedifferencebetweenaccountingincomeandcashflow.Calculateafirm’scashflow.27ChapterOutline2.1TheBalanceSheet.2.2TheIncomeStatement.2.3Taxes.2.4NetWorkingCapital.2.5CashFlowoftheFirm.2.6TheAccountingStatementofCashFlows.2.7CashFlowManagement.28SourcesofInformationAnnualreports.WallStreetJournal.Internet.NYSE()Nasdaq()Textbook()SEC.EDGAR.10K&10Qreports.292.1TheBalanceSheetAnaccountant’ssnapshotofthefirm’saccountingvalueataspecificpointintimeTheBalanceSheetIdentityis:30TheBalanceSheetoftheU.S.CompositeCorporation1Theassetsarelistedinorderbythelengthoftimeitwouldnormallytakeafirmwithongoingoperationstoconvertthemintocash.Clearly,cashismuchmoreliquidthanproperty,plant,andequipment.Accessthetextalternativeforslideimages31BalanceSheetAnalysisWhenanalyzingabalancesheet,thefinancialmanagershouldbeawareofthreeconcerns:Liquidity.Debtversusequity.Valueversuscost.32LiquidityLiquidityreferstotheeaseandquicknesswithwhichassetscanbeconvertedtocash—withoutasignificantlossinvalue.Currentassetsarethemostliquid.Somefixedassetsareintangible.Themoreliquidafirm’sassets,thelesslikelythefirmistoexperienceproblemsmeetingshort-termobligations.Liquidassetsfrequentlyhavelowerratesofreturnthanfixedassets.33DebtversusEquityBondholdersgenerallyreceivethefirstclaimonthefirm’scashflow.Stockholders’equityistheresidualdifferencebetweenassetsandliabilities.34ValueversusCostUndergenerallyacceptedaccountingprinciples(G

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P),auditedfinancialstatementsoffirmsintheU.S.carryassetsatcost.Marketvalueisthepriceatwhichtheassets,liabilities,andequitycouldactuallybeboughtorsold,whichisacompletelydifferentconceptfromhistoricalcost.352.2TheIncomeStatementMeasuresfinancialperformanceoveraspecificperiodoftimeTheaccountingdefinitionofincomeis:36TheIncomeStatementoftheU.S.CompositeCorporation-ITheoperationssectionoftheincomestatementreportsthefirm’srevenuesandexpensesfromprincipaloperations.Accessthetextalternativeforslideimages37TheIncomeStatementoftheU.S.CompositeCorporation-IIThenonoperatingsectionoftheincomestatementincludesallfinancingcosts,suchasinterestexpense.Accessthetextalternativeforslideimages38TheIncomeStatementoftheU.S.CompositeCorporation-IIIUsuallyaseparatesectionreportstheamountoftaxesleviedonincome.Accessthetextalternativeforslideimages39TheIncomeStatementoftheU.S.CompositeCorporation-IVNetincomeisthe“bottomline.”Accessthetextalternativeforslideimages40IncomeStatementAnalysisTherearethreethingstokeepinmindwhenanalyzinganincomestatement:GenerallyAcceptedAccountingPrinciples(G

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P)NoncashItems.TimeandCosts.41G

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PThematchingprincipleofG

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Pdictatesthatrevenuesbematchedwithexpenses.Thus,incomeisreportedwhenitisearned,eventhoughnocashflowmayhaveoccurred.42NoncashItemsDepreciationisthemostapparent.Nofirmeverwritesacheckfor“depreciation.”Anothernoncashitemisdeferredtaxes,whichdoesnotrepresentacashflow.Thus,netincomeisnotcash.43TimeandCostsIntheshortrun,certainequipment,resources,andcommitmentsofthefirmarefixed,butthefirmcanvarysuchinputsaslaborandrawmaterials.Inthelongrun,allinputsofproduction(andhencecosts)arevariable.Financialaccountantsdonotdistinguishbetweenvariablecostsandfixedcosts.Instead,accountingcostsusuallyfitintoaclassificationthatdistinguishesproductcostsfromperiodcosts.442.3TaxesTheonethingwecanrelyonwithtaxesisthattheyarealwayschanging.TaxCutsandJobsActof2017.SeetheI

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Swebsiteforcurrentinformation.Averageversusmarginaltaxrates.Marginal:Percentagepaidonthenextdollarearned.Othertaxes45AverageversusMarginalRatesSupposeyourfirmearns$4millionintaxableincome.Whatisthefirm’staxliability?Whatistheaveragetaxrate?Whatisthemarginaltaxrate?Ifyouareconsideringaprojectthatwillincreasethefirm’staxableincomeby$1million,whattaxrateshouldyouuseinyouranalysis?462.4NetWorkingCapitalN

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Cusuallygrowswiththefirm.47TheBalanceSheetoftheU.S.CompositeCorporation2Accessthetextalternativeforslideimages482.5CashFlowoftheFirmInfinance,themostimportantitemthatcanbeextractedfromfinancialstatementsistheactualcashflowofthefirm.Sincethereisnomagicinfinance,itmustbethecasethatthecashflowreceivedfromthefirm’sassetsmustequalthecashflowstothefirm’screditorsandstockholders.49FinancialCashFlowoftheU.S.CompositeCorporation-IAccessthetextalternativeforslideimages50FinancialCashFlowoftheU.S.CompositeCorporation-IIAccessthetextalternativeforslideimages51FinancialCashFlowoftheU.S.CompositeCorporation-IIIN

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Cgrewfrom$252millionin2018to$271millionin2019.Thisincreaseof$19millionistheadditiontoN

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C.Accessthetextalternativeforslideimages52FinancialCashFlowoftheU.S.CompositeCorporation-IVAccessthetextalternativeforslideimages53FinancialCashFlowoftheU.S.CompositeCorporation-VAccessthetextalternativeforslideimages54FinancialCashFlowoftheU.S.CompositeCorporation-VIAccessthetextalternativeforslideimages55FinancialCashFlowoftheU.S.CompositeCorporation-VIIThecashflowreceivedfromthefirm’sassetsmustequalthecashflowstothefirm’screditorsandstockholders:Accessthetextalternativeforslideimages562.6TheAccountingStatementofCashFlowsThereisanofficialaccountingstatementcalledthestatementofcashflows.Thishelpsexplainthechangeinaccountingcash,whichforU.S.Compositeis$41millionin2022.Thethreecomponentsofthestatementofcashflowsare:Cashflowfromoperatingactivities.Cashflowfrominvestingactivities.Cashflowfromfinancingactivities.57U.S.CompositeCorporationCashFlowfromOperatingActivitiesTocalculatecashflowfromoperatingactivities,startwithnetincome,addbacknoncashitemslikedepreciationandadjustforchangesincurrentassetsandliabilities(otherthancash).OperationsNetincome$86Depreciation90Deferredtaxes9ChangeinassetsandliabilitiesAccountsreceivable−24Inventories11Accountspayable35Cashflowfromoperatingactivities$20758U.S.CompositeCorporationCashFlowfromInvestingActivitiesCashflowfrominvestingactivitiesinvolveschangesincapitalassets:acquisitionoffixedassetsandsalesoffixedassets(i.e.,netcapitalexpenditures).Acquisitionoffixedassets−$198Salesoffixedassets25Cashflowfromoperatingactivities−$17359U.S.CompositeCorporationCashFlowfromFinancingActivitiesCashflowstoandfromcreditorsandownersincludechangesinequityanddebt.Retirementoflong-termdebt−$73Proceedsfromlong-termdebtsales86Dividends−43Repurchaseofstock−6Proceedsfromnewstockissue43Cashflowfromfinancingactivities$760U.S.CompositeCorporationStatementofCashFlowsThestatementofcashflowsistheadditionofcashflowsfromoperations,investingactivities,andfinancingactivities.Accessthetextalternativeforslideimages612.7CashFlowManagementEarningscanbemanipulatedusingsubjectivedecisionsrequiredunderG

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P.Totalcashflowismoreobjective,buttheunderlyingcomponentsmayalsobe“managed”Movingcashflowfromtheinvestingsectiontotheoperatingsectionmaymakethefirm’sbusinessappearmorestable.62QuickQuizWhatisthedifferencebetweenbookvalueandmarketvalue?Whichshouldweusefordecision-makingpurposes?Whatisthedifferencebetweenaccountingincomeandcashflow?Whichdoweneedtousewhenmakingdecisions?Whatisthedifferencebetweenaverageandmarginaltaxrates?Whichshouldweusewhenmakingfinancialdecisions?Howdowedetermineafirm’scashflows?Whataretheequations,andwheredowefindtheinformation?63EndofMainContent©McGrawHillLLC.Allrightsreserved.NoreproductionordistributionwithoutthepriorwrittenconsentofMcGrawHillLLC.AccessibilityContent:TextAlternativesforImages65TheBalanceSheetoftheU.S.CompositeCorporation1–TextAlternative1Returntoparent-slidecontainingimages.Currentassets:foryear2021and2022.Cashandequivalents$157,$198.Accountsreceivable270,294.Inventories280,269.Totalcurrentassets$707,$761.Fixedassets:Property,plant,andequipment$1,274,$1,423.Lessaccumulateddepreciation460,550.Netproperty,plant,andequipment$814,$873.Intangibleassetsandothers221,245.Totalfixedassets$1,035,$1,118.Totalassets$1,742,$1,879.Advancetorestoftextalternative.66TheBalanceSheetoftheU.S.CompositeCorporation1–TextAlternative2Returntoparent-slidecontainingimages.Currentliabilities:foryear2021and2022Accountspayable$455,$490.Totalcurrentliabilities$455,$490.Long-termliabilities:Deferredtaxes$104,$113.Long-termdebt-458,471.Totallong-termliabilities$562,$584.Stockholders'equity:Preferredstock$39,$39.Commonstock($1parvalue)32,55.Capitalsurplus327,347.Accumulatedretainedearnings347,390.Lesstreasurystock20,26.Totalequity$725,$805.Totalliabilitiesandstockholders'equity$1,742,$1,879.Returntoparent-slidecontainingimages.67TheIncomeStatementoftheU.S.CompositeCorporation-I–TextAlternativeReturntoparent-slidecontainingimages.Totaloperatingrevenues$2,262Costofgoodssold1,715Selling,general,andadministrativeexpenses327Depreciation90Operatingincome$130Otherincome29Earningsbeforeinterestandtaxes(EBIT)$159Interestexpense49Pretaxincome$110Taxes24Current:$15Deferred:9Netincome$86Additiontoretainedearnings$43Dividends43.Abracketincludesthefirstfivelines,fromtotaloperatingrevenuesthroughoperatingincome.Returntoparent-slidecontainingimages.68TheIncomeStatementoftheU.S.CompositeCorporation-II–TextAlternativeReturntoparent-slidecontainingimages.Totaloperatingrevenues$2,262Costofgoodssold1,715Selling,general,andadministrativeexpenses327Depreciation90Operatingincome$130Otherincome29Earningsbeforeinterestandtaxes(EBIT)$159Interestexpense49Pretaxincome$110Taxes24Current:$15Deferred:9Netincome$86Additiontoretainedearnings$43Dividends43.Abracketincludesthefirstfivelines,fromtotaloperatingrevenuesthroughoperatingincome.Abracketincludesthelinesfromotherincomethroughpretaxincome.Returntoparent-slidecontainingimages.69TheIncomeStatementoftheU.S.CompositeCorporation-III–TextAlternativeReturntoparent-slidecontainingimages.Totaloperatingrevenues$2,262Costofgoodssold1,715Selling,general,andadministrativeexpenses327Depreciation90Operatingincome$130Otherincome29Earningsbeforeinterestandtaxes(EBIT)$159Interestexpense49Pretaxincome$110Taxes24Current:$15Deferred:9Netincome$86Additiontoretainedearnings$43Dividends43.Abracketincludesthefirstfivelines,fromtotaloperatingrevenuesthroughoperatingincome.Abracketincludesthelinesfrompretaxthroughdeferred.Returntoparent-slidecontainingimages.70TheIncomeStatementoftheU.S.CompositeCorporation-IV–TextAlternativeReturntoparent-slidecontainingimages.Totaloperatingrevenues$2,262Costofgoodssold1,715Selling,general,andadministrativeexpenses327Depreciation90Operatingincome$130Otherincome29Earningsbeforeinterestandtaxes(EBIT)$159Interestexpense49Pretaxincome$110Taxes24Current:$15Deferred:9Netincome$86Additiontoretainedearnings$43Dividends43.Returntoparent-slidecontainingimages.71TheBalanceSheetoftheU.S.CompositeCorporation2–TextAlternativeReturntoparent-slidecontainingimages.Anoteindicatesthat$252millionisfoundbytakingtotalcurrentassetsfrom2021of$707millionminusthe2021currentliabilitiesof$455million.Acalloutboxreads"HereweseeNWCgrowto$271millionin2019from$252millionin2021."Anothernoteindicatesthat$271millionisfoundbytakingtotalcurrentassetsfrom2022of$761millionminusthe2022currentliabilitiesof$490million.Acalloutboxreadsthatthisincreaseof$19millionisaninvestmentofthefirm.Returntoparent-slidecontainingimages.72FinancialCashFlowoftheU.S.CompositeCorporation-I–TextAlternativeReturntoparent-slidecontainingimages.Cashflowofthefirm:Operatingcashflowof$234Earningsbeforeinterestandtaxesplusdepreciationminustaxes)Capitalspendingofnegative173(Acquisitionsoffixedassetsminussalesoffixedassets)Additionstonetworkingcapitalnegative19Total$42Cashflowtoinvestorsinthefirm:Debtof$36(Interestplusretirementofdebtminuslong-termdebtfinancing)Equity6(Dividendsplusrepurchaseofequityminusnewequityfinancing)Total$42OperatingCashFlowisasfollows:EBIT$159Depreciation$90CurrentTaxesnegative$15O

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F$234.The$234operatingcashflowfigurecircled.Returntoparent-slidecontainingimages.73FinancialCashFlowoftheU.S.CompositeCorporation-II–TextAlternativeReturntoparent-slidecontainingimages.Cashflowofthefirm:Operatingcashflowof$234Earningsbeforeinterestandtaxesplusdepreciationminustaxes)Capitalspendingofnegative173(Acquisitionsoffixedassetsminussalesoffixedassets)Additionstonetworkingcapitalnegative19Total$42Cashflowtoinvestorsinthefirm:Debtof$36(Interestplusretirementofdebtminuslong-termdebtfinancing)Equity6(Dividendsplusrepurchaseofequityminusnewequityfinancing)Total$42OperatingCashFlowisasfollows:EBIT$159Depreciation$90CurrentTaxesnegative$15O

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F$234.Thecapitalspendingfigureofnegative173iscircled.Returntoparent-slidecontainingimages.74FinancialCashFlowoftheU.S.CompositeCorporation-III–TextAlternativeReturntoparent-slidecontainingimages.Cashflowofthefirm:Operatingcashflowof$234Earningsbeforeinterestandtaxesplusdepreciationminustaxes)Capitalspendingofnegative173(Acquisitionsoffixedassetsminussalesoffixedassets)Additionstonetworkingcapitalnegative19Total$42Cashflowtoinvestorsinthefirm:Debtof$36(Interestplusretirementofdebtminuslong-termdebtfinancing)Equity6(Dividendsplusrepurchaseofequityminusnewequityfinancing)Total$42OperatingCashFlowisasfollows:EBIT$159Depreciation$90CurrentTaxesnegative$15O

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F$234.Theadditionstonetworkingcapitalfigureofnegative19iscircled.Returntoparent-slidecontainingimages.75FinancialCashFlowoftheU.S.CompositeCorporation-IV–TextAlternativeReturntoparent-slidecontainingimages.Cashflowofthefirm:Operatingcashflowof$234Earningsbeforeinterestandtaxesplusdepreciationminustaxes)Capitalspendingofnegative173(Acquisitionsoffixedassetsminussalesoffixedassets)Additionstonetworkingcapitalnegative19Total$42Cashflowtoinvestorsinthefirm:Debtof$36(Interestplusretirementofdebtminuslong-termdebtfinancing)Equity6(Dividendsplusrepurchaseofequityminusnewequityfinancing)Total$42Thetotalfigureundercashflowofthefirmof$42iscircled.Returntoparent-slidecontainingimages.76FinancialCashFlowoftheU.S.CompositeCorporation-V–TextAlternativeReturntoparent-slidecontainingimages.Cashflowofthefirm:Operatingcashflowof$234Earningsbeforeinterestandtaxesplusdepreciationminustaxes)Capitalspendingofnegative173(Acquisitionsoffixedassetsminussalesoffixedassets)Additionstonetworkingcapitalnegative19Total$42Cashflowtoinvestorsinthefirm:Debtof$36(Interestplusretirementofdebtminuslong-termdebtfinancing)Equity6(Dividendsplusrepurchaseofequityminusnewequityfinancing)Total$42CashFlowtoCreditors:Interest$49Retirementofdebt73Debtservice$122Proceedsfromlong-termdebtsalesnegative86Total$36Thedebtfigureof$36iscircled.Returntoparent-slidecontainingimages.77FinancialCashFlowoftheU.S.CompositeCorporation-VI–TextAlternativeReturntoparent-slidecontainingimages.Cashflowofthefirm:Operatingcashflowof$234Earningsbeforeinterestandtaxesplusdepreciationminustaxes)Capitalspendingofnegative173(Acquisitionsoffixedassetsminussalesoffixedassets)Additionstonetworkingcapitalnegative19Total$42Cashflowtoinvestorsinthefirm:Debtof$36(Interestplusretirementofdebtminuslong-termdebtfinancing)Equity6(Dividendsplusrepurchaseofequityminusnewequityfinancing)Total$42CashFlowtostockholders:Dividends$43Repurchaseofstock6CashFlowtostockholders49Proceedsfromnewstockissuenegative43Total$6Theequityfigureof$6iscircled.Returntoparent-slidecontainingimages.78FinancialCashFlowoftheU.S.CompositeCorporation-VII–TextAlternativeReturntoparent-slidecontainingimages.Cashflowofthefirm:Operatingcashflowof$234Earningsbeforeinterestandtaxesplusdepreciationminustaxes)Capitalspendingofnegative173(Acquisitionsoffixedassetsminussalesoffixedassets)Additionstonetworkingcapitalnegative19Total$42Cashflowtoinvestorsinthefirm:Debtof$36(Interestplusretirementofdebtminuslong-termdebtfinancing)Equity6(Dividendsplusrepurchaseofequityminusnewequityfinancing)Total$42ThetwototalamountsarecircledandasideequationreadsCF(A)equalsCF(B)plusCF(S).Returntoparent-slidecontainingimages.79U.S.CompositeCorporationStatementofCashFlows–TextAlternativeReturntoparent-slidecontainingimages.Operations:Netincome$86Depreciation90Deferredtaxes9ChangesinassetsandliabilitiesAccountsreceivablenegative24Inventories11Accountspayable35Totalcashflowfromoperations$207Investingactivities:Acquisitionoffixedassetsnegative$198Salesoffixedassets25Totalcashflowfrominvestingactivitiesnegative$173Financingactivities:Retirementoflong-termdebtnegative$73Proceedsfromlong-termdebtsales86Dividendsnegative43Repurchaseofstocknegative