1.    Explain in your own words the usefulness of the statement of cash flows (max. 5 points).

2.    Statement of Cash Flows: Distinguish a) among operating, investing and financing activities, b) support your outline by using the statement of cash flows of one of the companies you analysed (max. 12 points)

3.    Explain in your own words the link between financial statements (max. 12 points):

a.    Please explain which number from the cash flow statement at year-end is taken into account when drafting the balance sheet. Please also mention, where you find this number on the balance sheet.

b.    Please explain which number from the profit and loss account at year-end is taken into account when drafting the balance sheet. Please also mention, where you find this number on the balance sheet.

c.    Pick one of the companies you analysed and outline the link between the balance sheet, profit and loss account and statement of cash flows. Please, describe where the company numbers of the profit and loss account and the statement of cash flows are taken into account within the balance sheet.

4.    Purchasing non-current assets for cash: Explain why the effect of purchasing a non-current asset for cash is not the same in the statement of cash flows as in the statement of profit or loss (max. 6 Points)

5.    When analysing the statement of cash flow, Free Cash Flow is widely used (max. 10 points).

    a) How is Free Cash Flow calculated?
    b) What does Free Cash Flow number describe?
    c) Please calculate Free Cash Flow for the two companies you analysed and         provide a comment regarding your findings.

For question 2 and 3c you will need to use the attached document.