Problems and Cases 3.18 Interpreting the Statement of Cash Flows. The Coca-Cola Com- pany (Coca-Cola) manufactures and markets a variety of beverages. Exhibit 3.16 presents a statement of cash flows for Coca-Cola for three years. Exhibit 3.16 The Coca-Cola Company Statement of Cash Flows (amounts in millions) (Problem 3.18) Year Ended December 31, OPERATING ACTIVITIES Net income Depreciation and amortization Stock-based compensation expense Deferred income taxes Equity income or loss, net of dividends Foreign currency adjustments Gains on sales of assets, including bottling interests Other operating charges Other items Net change in operating assets and liabilities Net Cash Provided by Operating Activities INVESTING ACTIVITIES Acquisitions and investments, principally beverage and bottling companies and trademarks Purchases of other investments Proceeds from disposals of bottling companies and other investments Purchases of property, plant, and equipment Proceeds from disposals of property, plant, and equipment Other investing activities Net Cash Used in Investing Activities FINANCING ACTIVITIES Issuances of debt Payments of debt Issuances of stock Purchases of stock for treasury Dividends Net Cash Provided by (Used in) Financing Activities Effect of exchange rate changes on cash and cash equivalents CASH AND CASH EQUIVALENTS Net Increase (Decrease) During the Year Balance at beginning of year Balance at End of Year Source: The Coca-Cola Company, Form 10-K for the Fiscal Year Ended 2008. Year 3 $ 5,807 1,228 266 (360) 1,128 (42) (130) 209 153 (688) $ 7,571 $ (759) (240) 479 (1,968) 129 (4) $(2,363) $ 4,337 (4,308) 586 (1,079) (3,521) $(3,985) $ (615) $ 608 4,093 $ 4,701 LO 3-2, LO 3-3 Year 2 $ 5,981 1,163 313 109 (452) 9 (244) 166 99 6 $ 7,150 $(5,653) (99) 448 (1,648) 239 (6) $(6,719) $ 9,979 (5,638) 1,619 (1,838) (3,149) $ 973 $ 249 $1,653 2,440 $ 4,093 Year 1 $ 5,080 938 324 (35) 124 52 (303) 159 233 (615) $ 5,957 $ (901) (82) 640 (1,407) 112 (62) $(1,700) $ 617 (2,021) 148 (2,416) (2,911) $(6,583) $ 65 $(2,261) 4,701 $ 2,440 REQUIRED Discuss the relations between net income and cash flow from operations and among cash flows from operating, investing, and financing activities for the firm over the three-year period. Iden- tify characteristics of Coca-Cola's cash flows that you would expect for a mature company.