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Financial Statement Analysis: A Practitioner's Guide, Fourth Edition by FERNANDO ALVAREZ, MARTIN FRIDSON

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Chapter 4

The Statement of Cash Flows

The present version of the statement that traces the flow of funds in and out of the firm, the statement of cash flows, became mandatory, under Statement of Financial Accounting Standards (SFAS) 95, for issuers with fiscal years ending after July 15, 1988. Exhibit 4.1, the 2009 cash flow statement of Cisco Systems, illustrates the statement's division into cash flows from operating activities, investing activities, and financing activities. The predecessor of the statement of cash flows, the statement of changes in financial position, was first required under Accounting Principles Board (APB) opinion 19, in 1971.

Exhibit 4.1 Cisco Systems, Inc. Cash Flow Statement

Source: Company 10-K, Capital IQ, and author calculations.

Company Name: Cisco Systems, Inc. Form Type: 10-K Filed On: 9/11/2009
Years Ended July 25, 2009
Cash flows from operating activities:
Net income $6,134
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and other noncash items 1,768
Employee share-based compensation expense 1,140
Share-based compensation expense related to acquisitions and investments 91
Provision for doubtful accounts 54
Deferred income taxes (574)
Excess tax benefits from share-based compensation (22)
In-process research and development 63
Net losses (gains) on investments 80
Change in operating assets and liabilities, net of effects of acquisitions:
Accounts ...

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