Question

Forecast the Statement of Cash Flows

The following are the income statements and balance sheets of Amazon.com Inc.  

AMAZON.COM INC.
Consolidated Statement of Operations
$ millions		2016 Estimated	Dec. 31, 2015
Net product sales		$91,158	$79,268
Net service sales		38,833	27,738
Total net sales		129,991	107,006
Operating expenses
Cost of sales		87,094	71,651
Fulfillment		16,249	13,410
Marketing		6,370	5,254
Technology and content		15,209	12,540
General and administrative		2,080	1,747
Other operating expense (income), net		171	171
Total operating expenses		127,173	104,773
Income from operations		2,818	2,233
Interest income		60	50
Interest expense		(520)	(459)
Other income (expense), net		(256)	(256)
Total non-operating (expense)		(716)	(665)
Income (loss) before income taxes		2,102	1,568
Provision for income taxes		(799)	(950)
Equity-method investment activity, net of tax		(22)	(22)
Net income (loss)		$1,281	$596

AMAZON.COM INC.
Consolidated Balance Sheets
In millions, except par value		2016 Estimated	Dec. 31, 2015
Current Assets
Cash and cash equivalents		$22,726	$15,890
Marketable securities		3,918	3,918
Inventories		12,479	10,243
Accounts receivable, net and other		7,799	6,423
Total current assets		46,922	36,474
Property and equipment, net		21,117	21,838
Goodwill		3,759	3,759
Other assets		4,160	3,373
Total assets		$75,958	$65,444
Current Liabilities
Accounts payable		$24,828	$20,397
Accrued expenses and other		12,609	10,384
Unearned revenue		3,770	3,118
Total current liabilities		41,207	33,899
Long-term debt		7,997	8,235
Other long-term liabilities		12,089	9,926
Stockholders' equity
Preferred stock, $0.01 par value: Authorized shares-500
Issued and outstanding shares-none		0	0
Common stock, $0.01 par value: Authorized shares-5,000
Issued shares-494 and 488 Outstanding shares-471 and 465		5	5
Treasury stock, at cost		(1,837)	(1,837)
Additional paid-in capital		13,394	13,394
Accumulated other comprehensive loss		(723)	(723)
Retained earnings		3,826	2,545
Total stockholders' equity		14,665	13,384
Total liabilities and shareholders' equity		$75,958	$65,444

CAPEX (Increase in gross Property and equipment)/Net sales	4.3%
Depreciation expense/Prior year gross PPE	28.9%
Dividends	$0
Long-term debt payments required in fiscal 2016	$238

Refer to the above financial information for Amazon.com Inc. Prepare a forecast of its FY2016 statement of cash flows.

Round all answers to the nearest whole number. Use negative signs with answers, when appropriate.

Amazon.com Inc Forecasted Statement of Cash Flows
($ millions)	2016 Est.
Net income
Depreciation
Inventories
Accounts receivable, net and other
Other assets
Accounts payable
Accrued expenses and other
Unearned revenue
Other long-term liabilities
Cash from operating activities
CAPEX
Cash from investing activities
Debt repayment
Cash from financing activities
Change in cash
Cash at start of year
Cash at end of year

Answer 1

Solution

Amazon.com Inc
Forecasted Statement of Cash Flows
($ millions) 2016 Est.
Net income	1281
Depreciation	6311
Inventories	-2236
Accounts receivable, net and other	-1376
Other Assets	-787
Accounts payable	4431
Accrued expenses and other	2225
Unearned revenue	652
Other long-term liabilities	2163
Cash from operating activities	12664
CAPEX	-5590
Cash from investing activities	-5590
Debt repayment	-238
Cash from financing activities	-238
Change in cash	6836
Cast at start of year	15890
Cash at end of year	22726

Depreciation expense = 28.9% of prior year gross PPE = 28.9% X $21838 = $6311

CAPEX = 4.3% of net sales = 4.3% x $129991 = $5590