14th Edition

ISBN: 9781337119207

Author: Carl Warren, James M. Reeve, Jonathan Duchac

Publisher: Cengage Learning

Concept explainers

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Textbook Question

Chapter 13, Problem 4ADM

Priceline: Free cash flow

Priceline Group, Inc. is a leading provider of online travel reservation services, including brand names Priceline, KAYAK, and OpenTable. Selected cash flow information from the statement of cash flows for three recent years is as follows (in millions):

	Year 3	Year 2	Year 1
Net cash provided by operating activities	$ 2,914	$ 2,301	$ 1,786
Net cash used in investing activities	(2,349)	(2,162)	(1,563)
Net cash provided by (used in) financing activities	1,429	(404)	669
Additions to property, plant, and equipment	(132)	(84)	(55)
Repurchase common stock	(750)	(884)	(257)
Acquisitions and investments	(2,146)	(1,997)	(1,587)

A. Determine the net change in cash for each year.
B. Determine the free cash flow for each year.
C. How is the free cash flow being used based on the data provided?
D. Which is better for measuring the cash flow available for investment, dividends, debt repayments, and stock repurchases: the change in cash for the period or the free cash flow? Explain.

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Chapter 13, Problem 3ADM

Chapter 13, Problem 13.1TIF

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Chapter 13 Solutions

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Solution Summary: The author explains that the statement of cash flows shows the net changes in cash and cash equivalents of a company. The free cash flow is used to make acquisitions and investments.

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